##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 OR
 o
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO.
 Commission file number: 001-32567
 ALON USA ENERGY, INC.
  Delaware
    
    74-2966572(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 7616 LBJ Freeway, Suite 300, Dallas, Texas 75251
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value
    
    New York Stock Exchange$0.01 per share
  o þ
 o þ
 þ o
 þ
  o þ o
 o þ




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##### Table of Contents



PagePART IITEMS 1. AND 2. BUSINESS AND PROPERTIES
    
    
    1ITEM 1A. RISK FACTORS
    
    
    21ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    28ITEM 3. LEGAL PROCEEDINGS
    
    
    28ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    28PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASE OF EQUITY SECURITIES
    
    
    29ITEM 6. SELECTED FINANCIAL DATA
    
    
    30ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    32ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    63ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    64ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
    
    
    64ITEM 9A. CONTROLS AND PROCEDURES
    
    
    64ITEM 9B. OTHER INFORMATION
    
    
    65PART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    66ITEM 11. EXECUTIVE COMPENSATION
    
    
    66ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
    
    
    66ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    66ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    66PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    67First Amendment to Amended Revolving Credit AgreementExecutive Employment AgreementConsent of KPMG LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO and CFO Pursuant to Section 906
 i




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PART I
 
 ITEMS 1. AND 2. BUSINESS AND PROPERTIES.
 Statements in this Annual Report on Form 10-K, including those in Items 1 and 2, Business and
Properties, and Item 3, Legal Proceedings, that are not historical in nature should be deemed
forward-looking statements that are inherently uncertain. See Forward-Looking Statements in
Managements Discussion and Analysis of Financial Condition and Results of Operations in Item 7
for a discussion of forward-looking statements and of factors that could cause actual outcomes and
results to differ materially from those projected.
 COMPANY OVERVIEW
    www.sec.gov www.alonusa.com www.alonusa.com
 
    
    Compensation Committee Charter;
    
    Audit Committee Charter;
    
    Corporate Governance Guidelines; and
    
    Code of Business Conduct and Ethics.
  1




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BUSINESS
  
 Refining and Marketing
  Big Spring Refinery
    2




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Year Ended December 31,2006
    
    2005
    
    2004Bpd
    
    %
    
    Bpd
    
    %
    
    Bpd
    
    %Refinery throughput:Sweet crude
    
    
    2,987
    
    
    
    4.6
    
    
    
    5,072
    
    
    
    7.8
    
    
    
    4,321
    
    
    
    7.0Sour crude
    
    
    58,529
    
    
    
    89.4
    
    
    
    55,643
    
    
    
    86.0
    
    
    
    53,646
    
    
    
    87.0Blendstocks
    
    
    3,897
    
    
    
    6.0
    
    
    
    4,040
    
    
    
    6.2
    
    
    
    3,697
    
    
    
    6.0Total refinery throughput (1)
    
    
    65,413
    
    
    
    100.0
    
    
    
    64,755
    
    
    
    100.0
    
    
    
    61,664
    
    
    
    100.0Refinery production:Gasoline
    
    
    29,671
    
    
    
    46.0
    
    
    
    29,499
    
    
    
    45.8
    
    
    
    28,711
    
    
    
    46.8Diesel/jet
    
    
    20,651
    
    
    
    32.0
    
    
    
    21,903
    
    
    
    34.0
    
    
    
    19,939
    
    
    
    32.5Asphalt
    
    
    6,147
    
    
    
    9.5
    
    
    
    5,824
    
    
    
    9.1
    
    
    
    5,781
    
    
    
    9.4Petrochemicals
    
    
    4,465
    
    
    
    6.9
    
    
    
    4,256
    
    
    
    6.6
    
    
    
    4,492
    
    
    
    7.3Other
    
    
    3,627
    
    
    
    5.6
    
    
    
    2,911
    
    
    
    4.5
    
    
    
    2,449
    
    
    
    4.0Total refinery production (2)
    
    
    64,561
    
    
    
    100.0
    
    
    
    64,393
    
    
    
    100.0
    
    
    
    61,372
    
    
    
    100.0Refinery utilization (3)
    
    
    90.8
    %
    
    
    
    
    
    
    94.3
    %
    
    
    
    
    
    
    95.0
    %
 
 (1)
    
    Total refinery throughput represents the total of crude oil and blendstock inputs in the
refinery production process.(2)
    
    Total refinery production represents the bpd of various finished products produced from
processing oil and other refinery feedstocks through the crude units and other conversion
units at our Big Spring refinery.(3)
    
    Refinery utilization represents average daily crude oil throughput divided by crude oil
capacity, excluding planned periods of downtime for maintenance and turnarounds. In March
2005, we expanded the crude oil throughput capacity of the Big Spring refinery from 62,000 bpd
to 70,000 bpd.  Big Spring Refinery Raw Material Supply
   3




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Crude Oil Pipelines
  Crude Oil Pipelines
    
    Status
    
    Miles
    
    ConnectionsAmdel
    
    Sunoco Throughput
    
    
    504
    
    
    Midland and NederlandWhite Oil
    
    Sunoco Throughput
    
    
    25
    
    
    Garden City (Amdel) and Big SpringMesa Interconnect
    
    Owned
    
    
    4
    
    
    Mesa pipeline and Big SpringCenturion
    
    Owned (leased to Centurion)
    
    
    3
    
    
    Centurion pipeline and Big Spring
    Big Spring Refinery Production
 Gasoline
 Distillates
 4




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Asphalt
 Petrochemical Feedstocks and Other
 Big Spring Refinery Transportation Fuel Marketing
   Branded Transportation Fuel Marketing
  Unbranded Transportation Fuel Marketing
 Jet Fuel Marketing
 5




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Product Supply Sales
 Big Spring Product Pipelines
  ExpirationProduct Pipelines
    
    Access
    
    Miles
    
    Connections
    
    DatePlains (1)
    
    Lease
    
    
    38
    
    
    Coahoma and Midland
    
    
    2007Fin-Tex
    
    HEP throughput
    
    
    137
    
    
    Midland and Orla (Holly)
    
    
    2020Holly
    
    Lease
    
    
    133
    
    
    Orla and El Paso
    
    
    2018Trust
    
    HEP throughput
    
    
    332
    
    
    Big Spring/Abilene/Wichita Falls
    
    
    2020Dyess JP-8
    
    HEP throughput
    
    
    2
    
    
    Abilene and Dyess Air Force Base
    
    
    2020River
    
    HEP throughput
    
    
    47
    
    
    Wichita Falls and Duncan (Magellan)
    
    
    2020Carswell
    
    Owned
    
    
    148
    
    
    Abilene and Fort Worth
    
    
    N/A
 
 (1)
    
    The description of the Plains pipeline does not include a four-mile pipeline that we own that
connects Big Spring and Coahoma.     6




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Product Terminals
  WorkingTerminals
    
    Access
    
    Capacity (1)
    
    Supply Source
    
    Mode of DeliveryBig Spring, Texas (2)
    
    Owned
    
    
    331
    
    
    Pipeline/refinery
    
    Pipeline/truckAbilene, Texas
    
    HEP
    
    
    111
    
    
    Pipeline
    
    Pipeline/truckWichita Falls, Texas
    
    HEP
    
    
    155
    
    
    Pipeline
    
    TruckDuncan, Oklahoma
    
    Owned (3)
    
    
    154
    
    
    Pipeline
    
    PipelineOrla, Texas
    
    HEP
    
    
    116
    
    
    Pipeline
    
    PipelineSouthlake, Texas
    
    Owned
    
    
    212
    
    
    Pipeline
    
    TruckTotal
    
    
    
    
    1,079
 
 (1)
    
    Measured in thousands of barrels.(2)
    
    Includes the tankage located at our Big Spring refinery.(3)
    
    The terminal is owned, but the underlying real property is leased.  West Coast Refineries and Terminals
     7




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Period Ended December 31, 2006 (1)Bpd
    
    %Refinery throughput:Sour crude
    
    
    37,171
    
    
    
    61.9Heavy crude
    
    
    22,533
    
    
    
    37.5Blendstocks
    
    
    362
    
    
    
    .6Total refinery throughput (2)
    
    
    60,066
    
    
    
    100.0Refinery production:Gasoline
    
    
    6,806
    
    
    
    11.6Diesel/jet
    
    
    11,026
    
    
    
    18.9Asphalt
    
    
    19,500
    
    
    
    33.3Other
    
    
    12,126
    
    
    
    20.7Light Unfinished
    
    
    6,144
    
    
    
    10.5Heavy Unfinished
    
    
    2,938
    
    
    
    5.0Total refinery production (3)
    
    
    58,540
    
    
    
    100.0Refinery utilization (4)
    
    
    83.8
    %
 
 (1)
    
    Represents throughput and production data for the period from August 1, 2006 through December
31, 2006 for the Paramount refinery and for the period from September 28, 2006 through
December 31, 2006 for the Long Beach refinery.(2)
    
    Total refinery throughput represents the total of crude oil and blendstock inputs in the
refinery production process.(3)
    
    Total refinery production represents the bpd of various finished products produced from
processing crude oil and other refinery feedstocks through the crude units and other
conversion units at our California refineries. 8




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(4)
    
    Refinery utilization represents average daily crude oil throughput divided by crude oil
capacity during the period in which we have operated the California refineries, excluding
planned periods of downtime for
maintenance and turnarounds. In December 2006, the Paramount refinery underwent a planned
two-week turnaround on its Number 1 crude unit which resulted in a 24,000 bpd decrease in crude
oil capacity for a two-week period. California Refineries Raw Material Supply
  Crude Oil Pipelines
  Crude Oil Pipelines
    
    Status
    
    Miles
    
    
    ConnectionsParamount Crude
    
    Owned
    
    
    2.5
    
    
    Paramount and East Hynes TerminalChevron Crude
    
    Third Party
    
    
    15
    
    
    Paramount and local gathering systemNo. 3/No. 4
    
    Owned
    
    
    13
    
    
    Long Beach and Long Beach HarborBP
    
    Third Party
    
    
    1
    
    
    Long Beach and East Hynes Terminal
  California Refineries Production
 Gasoline
 Distillates
 Asphalt
 9




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Light and Heavy Unfinished Feedstocks
 California Refineries Transportation Fuel Marketing
    California Product Pipelines/Terminal
   Product Pipelines
    
    Access
    
    Miles
    
    ConnectionsLine 145
    
    Owned and Leased
    
    
    8
    
    
    Paramount to a connection with Line
166Line 166
    
    Leased
    
    
    2
    
    
    Connects to Line 145 to Carson,
California (Kinder Morgan)Line 35
    
    Owned
    
    
    4.5
    
    
    Paramount and East Hynes terminal (BP/DESC)
  Asphalt
  10




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Texas Asphalt Marketing
   West Coast Asphalt Marketing
   11




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Asphalt StorageTerminals
    
    Capacity (1)
    
    Receipt Capabilities
    
    Delivery CapabilitiesCalifornia Refineries
    
    1,800
    
    Pipeline, Rail, Truck
    
    Rail, TruckWillbridge, OR refinery
    
    1,032 (2)
    
    Pipeline, Rail, Truck, Marine
    
    Rail, Truck, MarineElk Grove, CA
    
    300
    
    Rail, Truck
    
    TruckBakersfield, CA
    
    100
    
    Rail, Truck
    
    TruckMojave, CA
    
    240
    
    Rail, Truck
    
    TruckRichmond Beach, WA
    
    1,060 (2)
    
    Rail, Truck, Marine
    
    Truck, MarineFernley, NV (3)
    
    250
    
    Rail, Truck
    
    TruckPhoenix, AZ
    
    160
    
    Rail, Truck
    
    TruckFlagstaff, AZ
    
    27
    
    Rail, Truck
    
    TruckFredonia, AZ
    
    60
    
    Truck
    
    Truck
 
 (1)
    
    Measured in thousands of barrels.(2)
    
    Storage figures for Willbridge and Richmond Beach include crude oil, fuel oil and other
products.(3)
    
    Owned 50%.    Retail
   12




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Location
    
    Owned
    
    Leased
    
    TotalBig Spring, Texas
    
    
    6
    
    
    
    1
    
    
    
    7El Paso, Texas
    
    
    13
    
    
    
    76
    
    
    
    89Lubbock, Texas
    
    
    17
    
    
    
    5
    
    
    
    22Midland, Texas
    
    
    9
    
    
    
    9
    
    
    
    18Odessa, Texas
    
    
    10
    
    
    
    25
    
    
    
    35Wichita Falls, Texas
    
    
    8
    
    
    
    4
    
    
    
    12Albuquerque, New Mexico
    
    
    12
    
    
    
    11
    
    
    
    23Total stores
    
    
    75
    
    
    
    131
    
    
    
    206
  Convenience Store Management and Employees
 Distribution and Supply
 7-Eleven License Agreement
 Technology and Store Automation
 Competition
  13




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14




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Government Regulation and Legislation
 Environmental Controls and Expenditures
  Environmental Expenditures
      15




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Remediation Efforts
      16




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Environmental Indemnity from FINA
 Environmental Insurance
 Environmental Indemnity to HEP
  17




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Environmental Indemnity to Sunoco
 Other Government Regulation
     Employees
  18




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Properties
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionDavid Wiessman
    
    
    52
    
    
    Executive Chairman of the Board of DirectorsJeff D. Morris
    
    
    55
    
    
    Director, President and Chief Executive OfficerClaire A. Hart
    
    
    51
    
    
    Senior Vice PresidentJoseph A. Concienne
    
    
    56
    
    
    Senior Vice President of Refining and TransportationAlan Moret
    
    
    52
    
    
    Senior Vice President of Asphalt OperationsShai Even
    
    
    38
    
    
    Vice President, Chief Financial Officer and TreasurerJimmy C. Crosby
    
    
    47
    
    
    Vice President of Refining and SupplyJoseph Israel
    
    
    35
    
    
    Vice President of Mergers and AcquisitionsHarlin R. Dean
    
    
    40
    
    
    Vice President, General Counsel and SecretaryJoseph Lipman
    
    
    61
    
    
    President and Chief Executive Officer of SCS
  David Wiessman
 Jeff D. Morris
 19




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Claire A. Hart
 Joseph A. Concienne
 Alan Moret
 Shai Even
 Jimmy C. Crosby
 Joseph Israel
 Harlin R. Dean
 Joseph Lipman
 20




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ITEM 1A. RISK FACTORS.
  The price volatility of crude oil, other feedstocks, refined products and fuel and utility
services may have a material adverse effect on our earnings, profitability and cash flows.
  
    
    changes in global and local economic conditions;
    
    domestic and foreign demand for fuel products;
    
    worldwide political conditions, particularly in significant oil producing regions such
as the Middle East, West Africa and Venezuela;
    
    the level of foreign and domestic production of crude oil and refined products and the
level of crude oil, feedstock and refined products imported into the United States;
    
    utilization rates of U.S. refineries;
    
    development and marketing of alternative and competing fuels;
    
    U.S. government regulations; and
    
    local factors, including market conditions, weather conditions and the level of
operations of other refineries and pipelines in our markets.
    21




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Our profitability depends, in part, on the sweet/sour crude oil price spread. A decrease in
this spread could negatively affect our profitability.
  The profitability of our California refineries depends, in part, on the light/heavy crude oil
price spread. A decrease in this spread could negatively affect our profitability.
  The dangers inherent in our operations could cause disruptions and could expose us to
potentially significant losses, costs or liabilities.
   We are subject to interruptions of supply as a result of our reliance on pipelines for
transportation of crude oil and refined products.
  If the price of crude oil increases significantly, it could reduce our profit on our
fixed-price asphalt supply contracts.
  Our operating results are seasonal and generally lower in the first and fourth quarters of the
year.
  22




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If the price of crude oil increases significantly, it could limit our ability to purchase
enough crude oil to operate our refineries at full capacity.
  Changes in our credit profile could affect our relationships with our suppliers, which could
have a material adverse effect on our liquidity and our ability to operate our refineries at full
capacity.
  Competition in the refining and marketing industry is intense, and an increase in competition
in the markets in which we sell our products could adversely affect our earnings and profitability.
  Competition in the asphalt industry is intense, and an increase in competition in the markets
in which we sell our asphalt products could adversely affect our earnings and profitability.
   Competition in the retail industry is intense, and an increase in competition in the markets
in which our retail businesses operate could adversely affect our earnings and profitability.
  23




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We may incur significant costs to comply with new or changing environmental laws and
regulations.
    We may incur significant costs and liabilities with respect to environmental lawsuits and
proceedings and any investigation and remediation of existing and future environmental conditions.
  24




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We could incur substantial costs or disruptions in our business if we cannot obtain or
maintain necessary permits and authorizations or otherwise comply with health, safety,
environmental and other laws and regulations.
  We could encounter significant opposition to our refining operations at our Paramount
refinery.
  Certain of our facilities are located in areas that have a history of earthquakes, the
occurrence of which could materially impact our operations.
  Terrorist attacks, threats of war or actual war may negatively affect our operations,
financial condition, results of operations and prospects.
  The occurrence of a release of hazardous materials or a catastrophic event affecting our
Paramount refinery could endanger persons living nearby.
  25




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Covenants in our debt instruments could limit our ability to undertake certain types of
transactions and adversely affect our liquidity.
  Our insurance policies do not cover all losses, costs or liabilities that we may experience.
  We are exposed to risks associated with the credit-worthiness of our insurers.
  If we lose any of our key personnel, our ability to manage our business and continue our
growth could be negatively affected.
  A substantial portion of our refining workforce is unionized, and we may face labor
disruptions that would interfere with our operations.
  26




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We conduct our convenience store business under a license agreement with 7-Eleven, and the
loss of this license could adversely affect the results of operations of our retail segment.
  We may not be able to successfully execute our strategy of growth through acquisitions.
  
    
    diversion of management time and attention from our existing business;
    
    challenges in managing the increased scope, geographic diversity and complexity of operations;
    
    difficulties in integrating the financial, technological and management standards,
processes, procedures and controls of an acquired business with those of our existing
operations;
    
    liability for known or unknown environmental conditions or other contingent liabilities
not covered by indemnification or insurance;
    
    greater than anticipated expenditures required for compliance with environmental or
other regulatory standards or for investments to improve operating results;
    
    difficulties in achieving anticipated operational improvements;
    
    incurrence of additional indebtedness to finance acquisitions or capital expenditures
relating to acquired assets; and
    
    issuance of additional equity, which could result in further dilution of the ownership
interest of existing stockholders.
  We depend upon our subsidiaries for cash to meet our obligations and pay any dividends, and we
do not own 100% of the stock of our operating subsidiaries.
   27




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It may be difficult to serve process on or enforce a United States judgment against certain of
our directors.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  28




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE
OF EQUITY SECURITIES.
 Market Information
   Quarterly Period
    
    High
    
    Low2006Fourth Quarter
    
    $
    31.85
    
    
    $
    26.28Third Quarter
    
    
    42.97
    
    
    
    25.10Second Quarter
    
    
    36.20
    
    
    
    24.05First Quarter
    
    
    25.65
    
    
    
    18.832005Fourth Quarter
    
    
    25.05
    
    
    
    18.05Third Quarter
    
    
    26.50
    
    
    
    17.05
 Holders
  Dividends
       29




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Recent Sales of Unregistered Securities
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Stockholder Return Performance Graph
  
 
 ITEM 6. SELECTED FINANCIAL DATA.
   30




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Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands, except per share data)STATEMENT OF OPERATIONS DATA:Net sales (1)
    
    $
    3,198,084
    
    
    $
    2,328,507
    
    
    $
    1,707,564
    
    
    $
    1,410,766
    
    
    $
    1,207,723Operating costs and expenses (1)
    
    
    2,982,005
    
    
    
    2,178,335
    
    
    
    1,638,300
    
    
    
    1,368,473
    
    
    
    1,182,663Gain on disposition of assets (2)
    
    
    63,255
    
    
    
    38,591
    
    
    
    175
    
    
    
    
    
    
    
    Operating income
    
    
    279,334
    
    
    
    188,763
    
    
    
    69,439
    
    
    
    42,293
    
    
    
    25,060Net income
    
    
    157,368
    
    
    
    103,988
    
    
    
    25,132
    
    
    
    14,068
    
    
    
    4,352Earnings per share (3)
    
    $
    3.37
    
    
    $
    2.61
    
    
    $
    .72
    
    
    $
    .40
    
    
    $
    .12Cash dividends per common share
    
    
    3.03
    
    
    
    1.96
    
    
    
    
    
    
    
    
    
    
    
    Weighted average shares outstanding (3)
    
    
    46,738
    
    
    
    39,889
    
    
    
    35,001
    
    
    
    35,001
    
    
    
    35,001CASH FLOW DATA:Net cash provided by (used in):Operating activities
    
    $
    142,977
    
    
    $
    137,895
    
    
    $
    76,743
    
    
    $
    76,173
    
    
    $
    5,001Investing activities
    
    
    (421,070
    )
    
    
    (106,962
    )
    
    
    (39,886
    )
    
    
    (34,664
    )
    
    
    (70,918
    )Financing activities
    
    
    205,439
    
    
    
    42,530
    
    
    
    19,244
    
    
    
    (39,667
    )
    
    
    62,238BALANCE SHEET DATA (end of period):Cash, cash equivalents and short-term
investments
    
    $
    64,166
    
    
    $
    322,140
    
    
    $
    63,357
    
    
    $
    7,256
    
    
    $
    5,414Working capital
    
    
    228,779
    
    
    
    275,996
    
    
    
    44,443
    
    
    
    5,071
    
    
    
    30,962Total assets
    
    
    1,408,785
    
    
    
    758,780
    
    
    
    472,516
    
    
    
    386,982
    
    
    
    392,066Total debt
    
    
    498,669
    
    
    
    132,390
    
    
    
    187,706
    
    
    
    166,816
    
    
    
    214,539Stockholders equity
    
    
    290,330
    
    
    
    279,493
    
    
    
    71,472
    
    
    
    46,923
    
    
    
    33,128
 
 (1)
    
    Our buy/sell arrangements involve linked purchases and sales related to refined product
contracts entered into to address location or grade requirements. As of January 1, 2006, such
buy/sell transactions are included on a net basis in sales in the consolidated statements of
operations and profits are recognized when the exchanged product is sold. Prior to January 1,
2006, the results of buy/sell transactions were recorded separately in sales and cost of sales
in the consolidated statements of operations. See Note 2 to our consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.(2)
    
    Gain on disposition of assets reported in 2006 reflects the $52.5 million pre-tax gain
recognized in connection with the Amdel and White Oil transaction and the recognition of $10.8
million deferred gain recorded in connection with the HEP transaction.(3)
    
    Weighted average shares outstanding and earnings per share amounts for the periods presented
reflect the effect of a 33,600-for-one split of our common stock which was effected on July 6,
2005. On August 2, 2005, we completed an initial public offering of 11,730,000 shares of our
common stock. The shares issued in our initial public offering are included in the number of
weighted average shares outstanding at December 31, 2006 and
December 31, 2005. 31




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 The following discussion of our financial condition and results of operations is provided as a
supplement to, and should be read in conjunction with, our consolidated financial statements and
the notes thereto included elsewhere in this Annual Report on Form 10-K and the other sections of
this Annual Report on Form 10-K , including Items 1 and 2 Business and Properties, and Item 6
Selected Financial Data.
 Forward-Looking Statements
    
    
    the synergies and accretion to reported earnings estimated to result from our
acquisitions of Paramount Petroleum Corporation and Edgington Oil Company may not be
realized;
    
    our ability to successfully integrate the operations and employees of Paramount
Petroleum Corporation and Edgington Oil Company and the timing of such integration;
    
    expected cost savings from the Paramount Petroleum Corporation and Edgington Oil
Company acquisitions may not be fully realized or recognized within the expected time frame, and
costs or expenses relating to the acquisitions may be higher than expected;
    
    revenues or margins following the Paramount Petroleum Corporation and Edgington Oil
Company acquisitions may be lower than expected;
    
    changes in general economic conditions and capital markets;
    
    changes in the underlying demand for our products;
    
    the availability, costs and price volatility of crude oil, other refinery feedstocks and refined products;
    
    changes in the sweet/sour spread;
    
    changes in the light/heavy spread;
    
    the effects of transactions involving forward contracts and derivative instruments;
    
    actions of customers and competitors;
 32




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##### Table of Contents




    
    changes in fuel and utility costs incurred by our facilities;
    
    disruptions due to equipment interruption, pipeline disruptions or failure at our or third-party facilities;
    
    the execution of planned capital projects;
    
    adverse changes in the credit ratings assigned to our trade credit and debt instruments;
    
    the effects of and cost of compliance with current and future state and federal
environmental, economic, safety and other laws, policies and regulations;
    
    operating hazards, natural disasters, casualty losses and other matters beyond our control; and
    
    the other factors discussed under Item 1A Risk Factors.
  Overview
  Refining and Marketing Segment
   Asphalt Segment
 33




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##### Table of Contents



Retail Segment
 Summary of 2006 Developments
         34




---



##### Table of Contents



2006 Operations Highlights
   
    
    Our average refinery operating margin for the Big Spring refinery increased by $0.94 per
barrel to $13.63 per barrel for the year ended December 31, 2006, compared to 2005.
    
    Refinery production at our Big Spring refinery increased to 64,561 barrels per day
(bpd) in 2006 compared to 64,393 bpd for 2005.
    
    The average sweet/sour spread for the year ended December 31, 2006 was $5.15 per barrel
compared to $4.62 per barrel for the year ended December 31, 2005. The average light/heavy
spread for the year ended December 31, 2006 was $14.74 per barrel compared to $15.55 per
barrel for the year ended December 31, 2005.
    
    Our capital expenditures and turnaround spending for 2006 totaled approximately $43.8
million, of which $3.9 million was spent on catalysts, $14.2 million was spent on
regulatory and compliance projects and $25.7 million was spent on various sustaining and
capital improvement projects.
 Major Influences on Results of Operations
 Refining and Marketing
   35




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##### Table of Contents



Asphalt
 Retail
 36




---



##### Table of Contents



Factors Affecting Comparability
  Prepayment of Term Loan
  Amdel and White Oil Pipeline Transaction
  Retail Store Acquisition
  Refinery Acquisitions
   37




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##### Table of Contents



Unscheduled Turnaround.
  Hurricane Activity
  HEP Transaction
    Increased Crude Oil Throughput Capacity.
  Results of Operations
 Net Sales
  38




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##### Table of Contents



Cost of Sales
 Direct Operating Expenses
 Selling, General and Administrative Expenses
 Summary Financial Tables
 39




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##### Table of Contents



Year Ended December 31,2006
    
    
    2005
    
    
    2004(dollars in thousands)STATEMENT OF OPERATIONS DATA:Net sales
    
    $
    3,198,084
    
    
    $
    2,328,507
    
    
    $
    1,707,564Operating costs and expenses:Cost of sales
    
    
    2,733,698
    
    
    
    1,990,338
    
    
    
    1,469,940Direct operating expenses
    
    
    129,277
    
    
    
    93,843
    
    
    
    75,742Selling, general and administrative expenses (1)
    
    
    84,756
    
    
    
    73,219
    
    
    
    73,554Depreciation and amortization (2)
    
    
    34,274
    
    
    
    20,935
    
    
    
    19,064Total operating costs and expenses
    
    
    2,982,005
    
    
    
    2,178,335
    
    
    
    1,638,300Gain on disposition of assets (3)
    
    
    63,255
    
    
    
    38,591
    
    
    
    175Operating income
    
    
    279,334
    
    
    
    188,763
    
    
    
    69,439Interest expense (4)
    
    
    (30,658
    )
    
    
    (19,326
    )
    
    
    (23,704
    )Equity
earnings of investees
    
    
    3,161
    
    
    
    1,086
    
    
    
    Other income, net
    
    
    7,740
    
    
    
    4,775
    
    
    
    277Income before income tax expense and minority interest
in income of subsidiaries
    
    
    259,577
    
    
    
    175,298
    
    
    
    46,012Income tax expense
    
    
    93,968
    
    
    
    65,518
    
    
    
    18,315Income before minority interest in income of subsidiaries
    
    
    165,609
    
    
    
    109,780
    
    
    
    27,697Minority interest in income of subsidiaries
    
    
    8,241
    
    
    
    5,792
    
    
    
    2,565Net income
    
    $
    157,368
    
    
    $
    103,988
    
    
    $
    25,132Earnings per share (5)
    
    $
    3.37
    
    
    $
    2.61
    
    
    $
    .72Weighted average shares outstanding (5)
    
    
    46,738
    
    
    
    39,889
    
    
    
    35,001Cash
dividends per share
    
    $
    3.03
    
    
    $
    1.96
    
    
    $
    CASH FLOW DATA:Net cash provided by (used in):Operating activities
    
    $
    142,977
    
    
    $
    137,895
    
    
    $
    76,743Investing activities
    
    
    (421,070
    )
    
    
    (106,962
    )
    
    
    (39,886
    )Financing activities
    
    
    205,439
    
    
    
    42,530
    
    
    
    19,244BALANCE SHEET DATA (end of period):Cash, cash equivalents and short-term investments
    
    $
    64,166
    
    
    $
    322,140
    
    
    $
    63,357Working capital
    
    
    228,779
    
    
    
    275,996
    
    
    
    44,443Total assets
    
    
    1,408,785
    
    
    
    758,780
    
    
    
    472,516Total debt
    
    
    498,669
    
    
    
    132,390
    
    
    
    187,706Stockholders equity
    
    
    290,330
    
    
    
    279,493
    
    
    
    71,472OTHER DATA:Adjusted EBITDA (6)
    
    $
    261,254
    
    
    $
    176,968
    
    
    $
    88,605Capital expenditures (7)
    
    
    39,832
    
    
    
    23,034
    
    
    
    27,301Capital expenditures for turnarounds and catalysts
    
    
    3,940
    
    
    
    12,041
    
    
    
    2,322
 
 (1)
    
    Includes corporate headquarters selling, general and administrative expenses of $511, $491
and $589 for the years ended December 31, 2006, 2005 and 2004, respectively, which are not
allocated to our three operating segments.(2)
    
    Includes corporate depreciation and amortization of $1,613, $1,914 and $1,480 for the years
ended December 31, 2006, 2005 and 2004, respectively, which are not allocated to our three
operating segments.(3)
    
    Gain on disposition of assets reported in 2006 reflects the $52,500 pre-tax gain recognized
in connection with the Amdel and White Oil transaction and the recognition of $10,800 deferred
gain recorded in connection with the HEP transaction. 40




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##### Table of Contents



(4)
    
    Interest expense for the year ended December 31, 2006 includes a $3,000 prepayment premium
and $3,894 of unamortized debt issuance costs written off as a result of the prepayment of our
$100,000 term loan in January 2006. Additionally, we prepaid $30,200 of retail debt in July
2006. This resulted in $600 in prepayment premiums and the write-off
of $2,197 of unamortized
debt issuance costs, both of which were recorded to interest expense in 2006.(5)
    
    Weighted average shares outstanding and earnings per share amounts for the periods presented
reflect the effect of a 33,600-for-one split of our common stock which was effected on July 6,
2005. On August 2, 2005, we completed an initial public offering of 11,730,000 shares of our
common stock. The shares issued in our initial public offering are included in number of
weighted average shares outstanding at December 31, 2006 and
December 31, 2005.(6)
    
    See  Reconciliation of Amounts Reported Under Generally Accepted Accounting Principles for
information regarding our definition of EBITDA and Adjusted EBITDA, its limitations as an
analytical tool and a reconciliation of net income to EBITDA and Adjusted EBITDA for the
periods presented.(7)
    
    Includes corporate capital expenditures of $188, $470 and $612 for the years ended December
31, 2006, 2005 and 2004, respectively, which are not allocated to our
three operating segments. 41




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##### Table of Contents



REFINING AND MARKETING SEGMENT
 Year Ended December 31,2006
    
    
    2005
    
    
    2004(dollars in thousands, except per barrel data andpricing statistics)STATEMENT OF OPERATIONS DATA:Net sales (1) (2)
    
    $
    2,849,137
    
    
    $
    2,136,807
    
    
    $
    1,443,629Operating costs and expenses:Cost of sales (2)
    
    
    2,491,457
    
    
    
    1,846,739
    
    
    
    1,264,462Direct operating expenses
    
    
    108,673
    
    
    
    88,145
    
    
    
    75,027Selling, general and administrative expenses
    
    
    19,192
    
    
    
    21,405
    
    
    
    22,187Depreciation and amortization
    
    
    24,961
    
    
    
    14,330
    
    
    
    13,194Total operating costs and expenses
    
    
    2,644,283
    
    
    
    1,970,619
    
    
    
    1,374,870Gain on disposition of assets (3)
    
    
    63,251
    
    
    
    38,628
    
    
    
    Operating income
    
    $
    268,105
    
    
    $
    204,816
    
    
    $
    68,759KEY OPERATING STATISTICS AND OTHER DATA:Total sales
volume (bpd) (11)
    
    
    131,662
    
    
    
    87,251
    
    
    
    85,950Non-integrated marketing sales volume (bpd) (4)
    
    
    17,995
    
    
    
    20,335
    
    
    
    19,926Non-integrated marketing margin (per barrel sales volume) (4)
    
    $
    (.47
    )
    
    $
    (1.32
    )
    
    $
    0.03Per barrel of throughput:Refinery operating margin  Big Spring (5)
    
    $
    13.63
    
    
    $
    12.69
    
    
    $
    7.95Refinery operating margin  CA Refineries (5)(11)
    
    
    3.50
    
    
    
    
    
    
    
    Refinery direct operating expenses  Big Spring (6)
    
    
    3.63
    
    
    
    3.73
    
    
    
    3.33Refinery direct operating expenses  CA Refineries (6)(11)
    
    
    2.38
    
    
    
    
    
    
    
    Capital expenditures
    
    $
    27,740
    
    
    $
    18,910
    
    
    $
    23,555Capital expenditures for turnarounds and catalysts
    
    
    3,940
    
    
    
    12,041
    
    
    
    2,322PRICING STATISTICS:WTI crude oil (per barrel)
    
    $
    66.06
    
    
    $
    56.49
    
    
    $
    41.42WTS crude oil (per barrel)
    
    
    60.91
    
    
    
    51.87
    
    
    
    37.45MAYA crude oil (per barrel)
    
    
    51.26
    
    
    
    40.89
    
    
    
    Crack spreads (3/2/1) (per barrel):Gulf Coast
    
    $
    12.48
    
    
    $
    11.45
    
    
    $
    6.77Group III
    
    
    14.37
    
    
    
    11.44
    
    
    
    8.02West Coast
    
    
    24.30
    
    
    
    21.43
    
    
    
    Crude differentials (per barrel):WTI less WTS
    
    $
    5.15
    
    
    $
    4.62
    
    
    $
    3.97WTI less MAYA
    
    
    14.74
    
    
    
    15.55
    
    
    
    Product price (per gallon):Gulf Coast unleaded gasoline
    
    
    182.9
    ¢
    
    
    158.8
    ¢
    
    
    116.4
    ¢Gulf Coast low-sulfur diesel
    
    
    195.1
    
    
    
    167.6
    
    
    
    111.0Group III unleaded gasoline
    
    
    186.6
    
    
    
    159.4
    
    
    
    119.0Group III low-sulfur diesel
    
    
    201.4
    
    
    
    166.5
    
    
    
    115.1West Coast LA Carbob (unleaded gasoline)
    
    
    219.6
    
    
    
    188.5
    
    
    
    West Coast LA ultra low-sulfur diesel
    
    
    206.0
    
    
    
    180.0
    
    
    
    Natural gas (per MMBTU)
    
    $
    6.98
    
    
    $
    9.01
    
    
    $
    6.19
 42




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##### Table of Contents



Year Ended December 31,2006
    
    
    2005
    
    
    2004Bpd
    
    
    %
    
    
    Bpd
    
    
    %
    
    
    Bpd
    
    
    %THROUGHPUT
AND PRODUCTION DATA:Big Spring RefineryRefinery throughput:Sweet crude
    
    
    2,987
    
    
    
    4.6
    
    
    
    5,072
    
    
    
    7.8
    
    
    
    4,321
    
    
    
    7.0Sour crude
    
    
    58,529
    
    
    
    89.4
    
    
    
    55,643
    
    
    
    86.0
    
    
    
    53,646
    
    
    
    87.0Blendstocks
    
    
    3,897
    
    
    
    6.0
    
    
    
    4,040
    
    
    
    6.2
    
    
    
    3,697
    
    
    
    6.0Total
refinery throughput (7)(8)
    
    
    65,413
    
    
    
    100.0
    
    
    
    64,755
    
    
    
    100.0
    
    
    
    61,664
    
    
    
    100.0Refinery production:Gasoline
    
    
    29,671
    
    
    
    46.0
    
    
    
    29,499
    
    
    
    45.8
    
    
    
    28,711
    
    
    
    46.8Diesel/jet
    
    
    20,651
    
    
    
    32.0
    
    
    
    21,903
    
    
    
    34.0
    
    
    
    19,939
    
    
    
    32.5Asphalt
    
    
    6,147
    
    
    
    9.5
    
    
    
    5,824
    
    
    
    9.1
    
    
    
    5,781
    
    
    
    9.4Petrochemicals
    
    
    4,465
    
    
    
    6.9
    
    
    
    4,256
    
    
    
    6.6
    
    
    
    4,492
    
    
    
    7.3Other
    
    
    3,627
    
    
    
    5.6
    
    
    
    2,911
    
    
    
    4.5
    
    
    
    2,449
    
    
    
    4.0Total refinery production (9)
    
    
    64,561
    
    
    
    100.0
    
    
    
    64,393
    
    
    
    100.0
    
    
    
    61,372
    
    
    
    100.0Refinery utilization (10)
    
    
    
    
    
    
    90.8
    %
    
    
    
    
    
    
    94.3
    %
    
    
    
    
    
    
    95.0
    %
 Period Ended December 31, 2006Bpd
    
    
    %THROUGHPUT
AND PRODUCTION DATA: (11)California
refineriesRefinery throughput:Sour crude
    
    
    37,171
    
    
    
    61.9Heavy crude
    
    
    22,533
    
    
    
    37.5Blendstocks
    
    
    362
    
    
    
    .6Total refinery throughput (7)
    
    
    60,066
    
    
    
    100.0Refinery production:Gasoline
    
    
    6,806
    
    
    
    11.6Diesel/jet
    
    
    11,026
    
    
    
    18.9Asphalt
    
    
    19,500
    
    
    
    33.3Other
    
    
    12,126
    
    
    
    20.7Light Unfinished
    
    
    6,144
    
    
    
    10.5Heavy Unfinished
    
    
    2,938
    
    
    
    5.0Total refinery production (9)
    
    
    58,540
    
    
    
    100.0Refinery
utilization (10)
    
    
    83.8
    %
 
 (1)
    
    Net sales include inter-segment sales to our asphalt and retail segments at prices which
approximate wholesale market price. These inter-segment sales are eliminated through
consolidation of our financial statements. Net sales for the year ended 2006 includes $3,300
for the sale of sulfur credits. Following the acquisition of Paramount Petroleum Corporation
and Edgington Oil Company, we notified the Environmental Protection Agency that we no longer
qualify as a small refiner which will limit our ability to generate sulfur credits in the
future.(2)
    
    Our buy/sell arrangements involve linked purchase and sales related to refined product
contracts entered into to address location or grade requirements. Included in cost of sales
are amounts which approximate the revenues resulting from these transactions. See Note 2 to
our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.(3)
    
    Gain on disposition of assets reported in 2006 reflects the $52,500 pre-tax gain recognized
in connection with the Amdel and White Oil transaction and the recognition of $10,800 deferred
gain recorded in connection with the HEP transaction. 43




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##### Table of Contents



(4)
    
    Non-integrated marketing sales volume represents refined products sales to our wholesale
marketing customers located in our non-integrated region. The refined products we sell in
this region are obtained from third-party suppliers. Non-integrated marketing margin
represents the margin between net sales and cost of sales attributable to our non-integrated
refined products sales volume expressed on a per barrel basis.(5)
    
    Refinery operating margin for Big Spring is a per barrel measurement calculated by dividing
the margin between net sales (exclusive of sale of sulfur credits for $3,300 for the
year-ended December 31, 2006) and cost of sales attributable to our refining and marketing
segment, exclusive of net sales and cost of sales relating to our non-integrated system, by
our Big Spring refinerys throughput volumes. Industry-wide refining results are driven and
measured by the margins between refined product prices and the prices for crude oil, which are
referred to as crack spreads. We compare our refinery operating margins to these crack
spreads to assess our operating performance relative to other participants in our industry.
The refinery operating margin for our California refineries is calculated by dividing the
margin between the net sales and cost of sales by the throughput volumes at the California
refineries. The refinery operating margin for California includes
inventory adjustments related to acquisitions of
$19,987 to cost of sales.(6)
    
    Refinery direct operating expense is a per barrel measurement calculated by dividing direct
operating expenses, exclusive of depreciation and amortization expense, by our refinery
throughput.(7)
    
    Total refinery throughput represents the aggregate volume of crude oil and blendstock used in
the refinery production process.(8)
    
    2006 throughput reflects downtime associated with a turnaround necessary to become compliant
with the new ultra low sulfur diesel requirements during the second quarter of 2006. 2005
throughput reflects the effect of the downtime associated with the planned major turnaround in
the first quarter of 2005. Refinery throughput increased to an average of 70,419 bpd for the
last three quarters of 2005, compared to average throughput of 47,447 bpd for the first
quarter 2005. Refinery production increased to an average production of 70,065 bpd for the
last three quarters of 2005, compared to average production of 47,060 bpd for the first
quarter 2005.(9)
    
    Total refinery production represents the barrels per day of various finished products
produced from processing crude oil and other refinery feedstocks through the crude units and
other conversion units at the applicable refinery.(10)
    
    Refinery utilization represents average daily crude oil throughput divided by crude oil
capacity, excluding planned periods of downtime for maintenance and turnarounds.(11)
    
    Represents throughput and production data for the period from August 1, 2006 through December
31, 2006 for our Paramount refinery and for the period from September 28, 2006 through
December 31, 2006 for our Long Beach refinery. 44




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##### Table of Contents



ASPHALT SEGMENT
 Year Ended December 31,2006
    
    
    2005
    
    
    2004(dollars in thousands, except per ton data)STATEMENT OF OPERATIONS DATA:Net sales
    
    $
    389,634
    
    
    $
    114,910
    
    
    $
    80,221Operating costs and expenses:Cost of sales (1)
    
    
    346,839
    
    
    
    124,124
    
    
    
    77,964Direct operating expenses
    
    
    20,604
    
    
    
    5,698
    
    
    
    715Selling, general and administrative expenses
    
    
    8,773
    
    
    
    1,527
    
    
    
    1,492Depreciation and amortization
    
    
    2,247
    
    
    
    134
    
    
    
    198Total operating costs and expenses
    
    
    378,463
    
    
    
    131,483
    
    
    
    80,369Operating income
    
    $
    11,171
    
    
    $
    (16,573
    )
    
    $
    (148
    )KEY OPERATING STATISTICS AND OTHER DATA:Number of terminals (end of period)
    
    
    12
    
    
    
    2
    
    
    
    2Asphalt sales (in thousands of tons)
    
    
    1,153
    
    
    
    487
    
    
    
    450Sales price per ton
    
    $
    337.93
    
    

    $
    235.95
    
    

    $
    178.27Asphalt margin per ton (2)
    
    
    37.12
    
    
    
    (18.92
    )
    
    
    5.01Capital expenditures
    
    
    3,156
    
    
    
    170
    
    
    
    258
 
 (1)
    
    Cost of sales includes inter-segment purchases of asphalt from our refining and marketing
segment at prices which approximate wholesale market price. These inter-segment purchases are
eliminated through consolidation of our financial statements.(2)
    
    Asphalt margin represents the difference between asphalt revenues and the related net cost of
purchased asphalt, including transportation costs and discounts. 45




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##### Table of Contents



RETAIL SEGMENT
 Year Ended December 31,2006
    
    
    2005
    
    
    2004(dollars in thousands, except per gallon data)STATEMENT OF OPERATIONS DATA:Net sales
    
    $
    351,493
    
    
    $
    326,537
    
    
    $
    301,491Operating costs and expenses:Cost of sales (1)
    
    
    287,582
    
    
    
    269,222
    
    
    
    245,291Selling, general and administrative expenses
    
    
    56,280
    
    
    
    49,796
    
    
    
    49,286Depreciation and amortization
    
    
    5,453
    
    
    
    4,557
    
    
    
    4,192Total operating costs and expenses
    
    
    349,315
    
    
    
    323,575
    
    
    
    298,769Gain (loss) on disposition of assets
    
    
    4
    
    
    
    (37
    )
    
    
    175Operating income
    
    $
    2,182
    
    
    $
    2,925
    
    
    $
    2,897KEY OPERATING STATISTICS AND OTHER DATA:Number of stores (end of period)
    
    
    206
    
    
    
    167
    
    
    
    167Fuel sales (thousands of gallons)
    
    
    75,969
    
    
    
    87,714
    
    
    
    97,541Fuel sales (thousands of gallons per site per month) (2)
    
    
    34
    
    
    
    45
    
    
    
    49Fuel margin (cpg) (3)
    
    
    16.0
    ¢
    
    
    14.9
    ¢
    
    
    12.9
    ¢Fuel sales price (dollar per gallon) (4)
    
    $
    2.55
    
    
    $
    2.20
    
    
    $
    1.76Merchandise sales
    
    $
    157,468
    
    
    $
    133,305
    
    
    $
    130,117Merchandise sales (per site per month) (2)
    
    
    70
    
    
    
    68
    
    
    
    65Merchandise margin (5)
    
    
    32.9
    %
    
    
    33.2
    %
    
    
    33.5
    %Capital expenditures
    
    
    8,748
    
    
    
    3,484
    
    
    
    3,134
 
 (1)
    
    Cost of sales includes inter-segment purchases of motor fuels from our refining and marketing
segment at prices which approximate market prices. These inter-segment purchases are
eliminated through consolidation of our financial statements.(2)
    
    Fuel and merchandise sales per site were adjusted to include 167 stores for six months and
206 stores for six months as a result of the 40 stores purchased on July 3, 2006.(3)
    
    Fuel margin represents the difference between motor fuel revenues and the net cost of
purchased fuel, including transportation costs and associated motor fuel taxes, expressed on a
cents per gallon basis. Motor fuel margins are frequently used in the retail industry to
measure operating results related to motor fuel sales.(4)
    
    Fuel sales price per gallon represents the average sales price for motor fuels sold through
our retail segment.(5)
    
    Merchandise margin represents the difference between merchandise sales revenues and the
delivered cost of merchandise purchases, net of rebates and commissions, expressed as a
percentage of merchandise sales revenues. Merchandise margins, also referred to as in-store
margins, are commonly used in the retail industry to measure in-store, or non-fuel, operating
results. Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
 Net Sales
 Consolidated
 Refining and Marketing Segment
 46




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##### Table of Contents



Asphalt Segment
 Retail Segment
 Cost of Sales
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Retail Segment
 Direct Operating Expenses
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Selling, General and Administrative Expenses
 Consolidated
 47




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##### Table of Contents



Refining and Marketing Segment
 Asphalt Segment
 Retail Segment
 Depreciation and Amortization
  Operating Income
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Retail Segment
 48




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##### Table of Contents



Interest Expense
  Income Tax Expense
 Application
of FASB Statement No. 109, Accounting for Income Taxes, for the Tax Deduction Provided to U.S.
Based Manufacturers by the American Jobs Creation Act of 2004
 Minority Interest In Income of Subsidiaries
  Net Income
  Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Net Sales
 Consolidated
 Refining and Marketing Segment
 49




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##### Table of Contents



Asphalt Segment
 Retail Segment
 Cost of Sales
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Retail Segment
 Direct Operating Expenses
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 50




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##### Table of Contents



Selling, General and Administrative Expenses
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Retail Segment
 Depreciation and Amortization
  Operating Income
 Consolidated
 Refining and Marketing Segment
 Asphalt Segment
 Retail
Segment
 51




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##### Table of Contents



Interest Expense
  Income Tax Expense
  Minority Interest In Income of Subsidiaries
  Net Income
  Liquidity and Capital Resources
   52




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##### Table of Contents



Cash Flow
  Year Ended December 312006
    
    
    2005
    
    
    2004(dollars in thousands)Cash provided by (used in):Operating activities
    
    $
    142,977
    
    
    $
    137,895
    
    
    $
    76,743Investing activities
    
    
    (421,070
    )
    
    
    (106,962
    )
    
    
    (39,886
    )Financing activities
    
    
    205,439
    
    
    
    42,530
    
    
    
    19,244Net increase (decrease) in cash and cash equivalents
    
    $
    (72,654
    )
    
    $
    73,463
    
    
    $
    56,101
 Cash Flows Provided By Operating Activities
   Cash Flows Used In Investing Activities
   Cash Flows Provided By Financing Activities
   53




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##### Table of Contents



Initial Public Offering
   Cash, Cash Equivalents and Short-Term Investment Position and Indebtedness
  Summary of Indebtedness
 As of December 31, 2006(dollars in thousands)Amount Outstanding
    
    
    Total Facilities
    
    

Total
Availability (2)Debt, including current portion:Term loan credit facility
    
    $
    447,750
    
    
    $
    447,750
    
    
    $
    Revolving credit facilities
    
    
    
    
    
    
    540,000
    (1)
    
    
    257,903Retail credit facilities
    
    
    50,919
    
    
    
    50,919
    
    
    
    Totals
    
    $
    498,669
    
    
    $
    1,038,669
    
    
    $
    257,903
 
 (1)
    
    Total facilities includes the total size of the Paramount
Credit Facility that was signed on
March 1, 2007 as described below.(2)
    
    Total availability was calculated as the lesser of (a) the total size of the facilities less
outstanding borrowings and letters of credit as of December 31, 2006 which was $362.4
million, and (b) total borrowing base less outstanding borrowings and letters of credit as of
December 31, 2006 which was $257.9 million. 54




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##### Table of Contents



Credit Facilities
 Israel Discount Bank Credit Facility
   
    
    a minimum consolidated tangible net worth equal to the sum of $106.0 million plus an
amount determined on a cumulative basis equal to the sum of 50% of any positive net income
for each fiscal year after December 31, 2004 (minimum consolidated tangible net worth as of
December 31, 2006 was $233.9 million and our actual consolidated tangible net worth was
$264.1 million);
    
    a ratio of total consolidated indebtedness less freely transferable cash and permitted
investments not subject to any lien (other than liens in favor of Israel Discount Bank) to
consolidated EBITDA for the last four fiscal quarters of no greater than 4.0 to 1.0 (the
ratio as of December 31, 2006 was 1.5 to 1.00);
    
    a minimum ratio of consolidated current assets to consolidated current liabilities of
1.0 to 1.0 (the ratio as of December 31, 2006 was 1.9 to 1.0); and
    
    a ratio of total consolidated EBITDA to consolidated interest expense, in each case as
of the end of any period of four fiscal quarters, to be not less than 2.0 to 1.0 (the ratio
as of December 31, 2006 was 8.3 to 1.0).
  55




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##### Table of Contents



Bank of America Credit Facility
  Credit Suisse Credit Facility
     Wachovia Credit Facility
 56




---



##### Table of Contents



Debt Repayment
 Term Loan
 Mortgage Loans and Equipment Loans
 Capital Spending
  57




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##### Table of Contents



2007
    
    
    2008(dollars in thousands)Refining and Marketing Segment:Sustaining maintenance
    
    $
    14,542
    
    
    $
    21,844Growth/profit improvement/other
    
    
    17,250
    
    
    
    27,100Chemical catalyst and turnaround
    
    
    11,144
    
    
    
    7,624Total
    
    
    42,936
    
    
    
    56,568Asphalt Segment:Sustaining maintenance
    
    
    2,290
    
    
    
    1,900Growth/profit improvement
    
    
    12,814
    
    
    
    7,000Total
    
    
    15,104
    
    
    
    8,900Retail Segment:Sustaining maintenance
    
    
    1,284
    
    
    
    1,740Growth/profit improvement
    
    
    14,520
    
    
    
    8,480Total
    
    
    15,804
    
    
    
    10,220Corporate Segment:Sustaining
    
    
    2,535
    
    
    
    262Total Capital Expenditures
    
    $
    76,379
    
    
    $
    75,950
 Clean Air Capital Expenditures
 Turnaround and
Chemical Catalyst Costs
   2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011(dollars in thousands)Scheduled turnaround costs
    
    $
    200
    
    
    $
    1,100
    
    
    $
    8,750
    
    
    $
    500
    
    
    $
    500Chemical catalyst costs
    
    
    10,944
    
    
    
    6,524
    
    
    
    9,053
    
    
    
    12,595
    
    
    
    9,000Total
    
    $
    11,144
    
    
    $
    7,624
    
    
    $
    17,803
    
    
    $
    13,095
    
    
    $
    9,500
 Contractual Obligations and Commercial Commitments
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years
    
    
    Total(dollars in thousands)Long-term debt obligations
    
    $
    6,739
    
    
    $
    39,855
    
    
    $
    13,076
    
    
    $
    438,999
    
    
    $
    498,669Operating lease obligations
    
    
    24,105
    
    
    
    55,661
    
    
    
    21,339
    
    
    
    55,534
    
    
    
    156,639Pipelines and Terminals Agreement (1)
    
    
    27,549
    
    
    
    82,647
    
    
    
    55,099
    
    
    
    206,671
    
    
    
    371,966Other commitments (2)
    
    
    2,827
    
    
    
    8,483
    
    
    
    5,654
    
    
    
    26,153
    
    
    
    43,117Total obligations
    
    $
    61,220
    
    
    $
    186,646
    
    
    $
    95,168
    
    
    $
    727,357
    
    
    $
    1,070,391
 58




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##### Table of Contents



(1)
    
    Balances represent the minimum committed volume multiplied by the tariff and terminal rates
pursuant to the terms of the Pipelines and Terminals Agreement with HEP, as well as our
minimum requirements with Sunoco.(2)
    
    Other commitments include refinery maintenance services costs.As of December 31, 2006, we did not have any capital lease obligations or any agreements to
purchase goods or services, other than those included in the table above, that were binding on
us and that specified all significant terms.  Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Inventory
 Environmental and Other Loss Contingencies
 59




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##### Table of Contents



Turnarounds and Chemical Catalyst Costs
 Impairment of Long-Lived Assets Accounting for the Impairment of Disposal of Long-Lived Assets
 Deferred Income Taxes
 Asset Retirement Obligations Accounting for Asset Retirement Obligations
  Goodwill and Intangible Assets
 New Accounting Standards and Disclosures
 Inventory Costs
 60




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##### Table of Contents



Share-Based Payment
 Accounting for Stock Issued to
Employees
 Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions
  Accounting for Conditional Retirement
Obligations
 Accounting Changes and Error Corrections
 Accounting for
Purchases and Sales of Inventory with the Same Counterparty
 61




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##### Table of Contents



Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
 SEC
Staff Guidance  Quantifying Financial Statement Misstatements
 Reconciliation of Amounts Reported Under Generally Accepted Accounting Principles
 Reconciliation of Adjusted EBITDA to amounts reported under generally accepted accounting
principles in financial statements.
  
    
    EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
    
    EBITDA and Adjusted EBITDA do not reflect the interest expense or the cash requirements
necessary to service interest or principal payments on our debt;
    
    EBITDA and Adjusted EBITDA do not reflect the prior claim that minority stockholders
have on the income generated by non-wholly-owned subsidiaries;
 62




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##### Table of Contents




    
    EBITDA and Adjusted EBITDA do not reflect changes in or cash requirements for our
working capital needs; and
    
    Our calculation of EBITDA and Adjusted EBITDA may differ from the EBITDA calculations of
other companies in our industry, limiting its usefulness as a comparative measure.
   For the Year Ended December 31,2006
    
    
    2005
    
    
    2004(dollars in thousands)Net income
    
    $
    157,368
    
    
    $
    103,988
    
    
    $
    25,132Minority interest in income of subsidiaries
    
    
    8,241
    
    
    
    5,792
    
    
    
    2,565Income tax expense
    
    
    93,968
    
    
    
    65,518
    
    
    
    18,315Interest expense
    
    
    30,658
    
    
    
    19,326
    
    
    
    23,704Depreciation and amortization
    
    
    34,274
    
    
    
    20,935
    
    
    
    19,064EBITDA
    
    
    324,509
    
    
    
    215,559
    
    
    
    88,780Gain on disposition of assets
    
    
    (63,255
    )
    
    
    (38,591
    )
    
    
    (175
    )Adjusted EBITDA
    
    $
    261,254
    
    
    $
    176,968
    
    
    $
    88,605
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Quantitative and Qualitative Disclosure About Market Risk
  Commodity Price Risk
    Interest
Rate Risk
  63




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##### Table of Contents



Wtd AvgDescription
    
    Contract
    
    Purchase
    
    Wtd Avg
    
    Contractof Activity
    
    Volume
    
    Price
    
    Sales Price
    
    Value
    
    Fair Value
    
    Gain (Loss)(in thousands)Futures-long (Crude)
    
    
    150,000
    
    
    
    61.69
    
    
    
    
    
    
    
    9,254
    
    
    
    9,158
    
    
    
    (96
    )Futures-short (Crude)
    
    
    (150,000
    )
    
    
    
    
    
    
    63.51
    
    
    
    (9,526
    )
    
    
    (9,158
    )
    
    
    368Futures-long (RBOB)
    
    
    175,000
    
    
    
    70.91
    
    
    
    
    
    
    
    12,408
    
    
    
    11,775
    
    
    
    (633
    )Futures-short (RBOB)
    
    
    (175,000
    )
    
    
    
    
    
    
    69.03
    
    
    
    (12,080
    )
    
    
    (11,775
    )
    
    
    305Futures-long (Heating Oil)
    
    
    90,000
    
    
    
    75.00
    
    
    
    
    
    
    
    6,750
    
    
    
    6,040
    
    
    
    (710
    )Futures-short (Heating Oil)
    
    
    (90,000
    )
    
    
    
    
    
    
    72.81
    
    
    
    (6,553
    )
    
    
    (6,040
    )
    
    
    513Forwards-long (refined products)
    
    
    10,000
    
    
    
    67.44
    
    
    
    
    
    
    
    674
    
    
    
    670
    
    
    
    (4
    )
 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
  64




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
 Internal Control-Integrated Framework
   Changes in Internal Control Over Financial Reporting
  Certifications
   
 ITEM 9B. OTHER INFORMATION.
  65




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
    
 ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 
  66




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    The following documents are filed as part of this report:(1)
    
    Consolidated Financial Statements and Schedule, see Index to Consolidated Financial
Statements and Schedule on page F-1.(2)
    
    Exhibits:Reference is made to the Index of Exhibits immediately preceding the exhibits hereto, which
index is incorporated herein by reference.
 Exhibit No.
    
    Description of Exhibit3.1
    
    Amended Restated Certificate of Incorporation of Alon USA Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Form S-1/A, filed by the Company on July 7, 2005, SEC File No.
333-124797).3.2
    
    Amended and Restated Bylaws of Alon USA Energy, Inc. (incorporated by reference to Exhibit
3.2 to Form S-1/A, filed by the Company on July 14, 2005, SEC File No. 333-124797).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Form S-1/A,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.1 
    
    Area License Agreement, dated as of June 2, 1993, between Southwest Convenience Stores, Inc.
and The Southland Corporation (incorporated by reference to Exhibit 10.1 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.2 
    
    Amendment to Area License Agreement and Consent to Assignment, dated as of December 20,
1996, between The Southland Corporation and Permian Basin Investments, Inc. d/b/a Southwest
Convenience Stores, Inc. (incorporated by reference to Exhibit 10.2.1 to Form S-1/A, filed
by the Company on July 7, 2005, SEC File No. 333-124797).10.3 
    
    Amendment No. 2 to Area License Agreement, dated as of August 14, 1997, between Southwest
Convenience Stores LLC and The Southland Corporation (incorporated by reference to Exhibit
10.2.2 to Form S-1/A, filed by the Company on July 7, 2005, SEC File No. 333-124797).10.4
    
    Trademark License Agreement, dated as of June 31, 2000, among Finamark, Inc., Atofina
Petrochemicals, Inc. and SWBU, L.P. (incorporated by reference to Exhibit 10.3 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).10.5
    
    First Amendment to Trademark License Agreement, dated as of April 11, 2001, among Finamark,
Inc., Atofina Petrochemicals, Inc. and SWBU, L.P. (incorporated by reference to Exhibit 10.4
to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.6
    
    Pipeline Lease Agreement, dated as of January 22, 2001, between Chevron Pipe Line Company
and Fin-Tex Pipe Line Company (incorporated by reference to Exhibit 10.5 to Form S-1, filed
by the Company on May 11, 2005, SEC File No. 333-124797).
 67




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.7
    
    Pipeline Lease Agreement, dated as of February 21, 1997, between Navajo Pipeline Company and
American Petrofina Pipe Line Company (incorporated by reference to Exhibit 10.6 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).10.8
    
    Contribution Agreement, dated as of January 25, 2005, among Holly Energy Partners, L.P.,
Holly Energy Partners  Operating, L.P., T & R Assets, Inc., Fin-Tex Pipe Line Company, Alon
USA Refining, Inc., Alon Pipeline Assets, LLC, Alon Pipeline Logistics, LLC, Alon USA, Inc.
and Alon USA, LP. (incorporated by reference to Exhibit 10.7 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).10.9
    
    Pipelines and Terminals Agreement, dated as of February 28, 2005, between Alon USA, LP and
Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.8 to Form S-1, filed by
the Company on May 11, 2005, SEC File No. 333-124797).10.10
    
    Master Lease, dated as of October 1, 2002, between SCS Finance I, L.P. and Southwest
Convenience Stores, LP (incorporated by reference to Exhibit 10.9 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).10.11
    
    Loan Agreement, dated as of October 1, 2002, between GE Capital Franchise Finance
Corporation and SCS Finance I, L.P. (incorporated by reference to Exhibit 10.10 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).10.12
    
    Equipment Loan and Security Agreement, dated as of October 1, 2002, between GE Capital
Franchise Finance Corporation and SCS Finance I, L.P. (incorporated by reference to Exhibit
10.11 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.13
    
    Master Lease, dated as of October 1, 2002, between SCS Finance II, L.P. and Southwest
Convenience Stores, LP. (incorporated by reference to Exhibit 10.12 to Form S-1, filed by
the Company on May 11, 2005, SEC File No. 333-124797).10.14
    
    Loan Agreement, dated as of October 1, 2002, between GE Capital Franchise Finance
Corporation and SCS Finance II, L.P. (incorporated by reference to Exhibit 10.13 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.15
    
    Equipment Loan and Security Agreement, dated as of October 1, 2002, between GE Capital
Franchise Finance Corporation and SCS Finance II, L.P. (incorporated by reference to Exhibit
10.14 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.16
    
    Amended and Restated Credit Agreement, dated as of January 14, 2004, among Alon USA, Inc.,
the lenders listed therein and Credit Suisse First Boston (incorporated by reference to
Exhibit 10.15 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.17
    
    First Amendment, dated as of February 10, 2005, to the Amended and Restated Credit
Agreement, dated as of January 14, 2004, among Alon USA, Inc., the lenders listed therein
and Credit Suisse First Boston, and the Guarantee and Collateral Agreement, dated as of
January 14, 2004, among Credit Suisse First Boston, Alon USA, Inc., the subsidiaries of Alon
USA, Inc. identified therein and Alon USA, Inc. (incorporated by reference to Exhibit 10.17
to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.18
    
    Second Amendment, dated as of May 6, 2005, to the Amended and Restated Credit Agreement,
dated as of January 14, 2004, among Alon USA Energy, Inc., the lenders listed therein and
Credit Suisse First Boston (incorporated by reference to Exhibit 10.18 to Form S-1/A, filed
by the Company on June 17, 2005, SEC File No. 333-124797).
 68




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.19
    
    Guarantee and Collateral Agreement, dated as of January 14, 2004, among Credit Suisse First
Boston, Alon USA, Inc., the subsidiaries of Alon USA, Inc. identified therein and Alon USA
Energy, Inc. (incorporated by reference to Exhibit 10.16 to Form S-1, filed by the Company
on May 11, 2005, SEC File No. 333-124797).10.20
    
    Amended Revolving Credit Agreement, dated as of January 14, 2004, among Alon USA, LP, the
guarantor companies and financial institutions identified therein and Israel Discount Bank
of New York (incorporated by reference to Exhibit 10.19 to Form S-1, filed by the Company on
May 11, 2005, SEC File No. 333-124797).10.21
    
    First Amendment, dated as of February 10, 2005, to the Amended Revolving Credit Agreement,
dated as of January 14, 2004, among Alon USA, LP, the guarantor companies and financial
institutions identified therein and Israel Discount Bank of New York (incorporated by
reference to Exhibit 10.20 to Form S-1, filed by the Company on May 11, 2005, SEC File No.
333-124797).10.22
    
    Second Amendment, dated as of June 16, 2005, to the Amended Revolving Credit Agreement,
dated as of January 14, 2004, among Alon USA, LP, the guarantor companies and financial
institutions identified therein and Israel Discount Bank of New York (incorporated by
reference to Exhibit 10.20.1 to Form S-1/A, filed by the Company on June 17, 2005, SEC File
No. 333-124797).10.23
    
    Amended Revolving Credit Agreement, dated as of February 15, 2006, among Alon USA, LP, the
guarantor companies and financial institutions named therein, Israel Discount Bank of New
York and Bank Leumi USA (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the
Company on February 16, 2006, SEC File No. 001-32567).10.24
    
    Amended Revolving Credit Agreement, dated as of June 22, 2006, among Alon USA, LP, EOC
Acquisition, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other
guarantor companies and financial institutions from time to time named therein (incorporated
by reference to Exhibit 10.2 to Form 8-K filed by the Company on June 26, 2006, SEC File No.
001-32567).10.25
    
    First Amendment to Amended Revolving Credit Agreement, dated as of August 4, 2006, to the
Amended Revolving Credit Agreement, dated as of June 22, 2006, among Alon USA, LP, EOC
Acquisition, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other
guarantor companies and financial institutions from time to time named therein.10.26
    
    Waiver, Consent, Partial Release and Second Amendment, dated as of February 28, 2007, to the
Amended Revolving Credit Agreement, dated as of June 22, 2006, Alon USA, LP, Edgington Oil
Company, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other guarantor
companies and financial institutions from time to time named therein (incorporated by
reference to Exhibit 10.2 to Form 8-K filed by the Company on March 5, 2007, SEC File No.
001-32567).10.27
    
    Credit Agreement, dated as of June 6, 2006, among Southwest Convenience Stores, LLC, the
lenders party thereto and Wachovia Bank, National Association (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by the Company on June 7, 2006, SEC File No. 001-32567).10.28
    
    Credit Agreement, dated as of June 22, 2006, among Alon USA Energy, Inc., the lenders party
thereto and Credit Suisse (incorporated by reference to Exhibit 10.1 to Form 8-K filed by
the Company on June 26, 2006, SEC File No. 001-32567).
 69




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Exhibit No.
    
    Description of Exhibit10.29
    
    Amended and Restated Credit Agreement, dated as of July 26, 2005, among Paramount Petroleum
Corporation, Bank of America, N.A. and Société Générale (incorporated by reference to
Exhibit 10.1 to Form 8-K, filed by the Company on August 9, 2006, SEC File No. 001-32567).10.30
    
    First Amendment to Amended and Restated Credit Agreement, dated as of January 26, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.2 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.31
    
    Second Amendment to Amended and Restated Credit Agreement, dated as of February 28, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.3 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.32
    
    Third Amendment to Amended and Restated Credit Agreement, dated as of June 12, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.4 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.33
    
    Fourth Amendment to Amended and Restated Credit Agreement, dated as of June 16, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.5 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.34
    
    Fifth Amendment to Amended and Restated Credit Agreement, dated as of June 22, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A., Banc of America Securities LLC and
the lenders party thereto (incorporated by reference to Exhibit 10.6 to Form 8-K, filed by
the Company on August 9, 2006, SEC File No. 001-32567).10.35
    
    Sixth Amendment to Amended and Restated Credit Agreement, dated as of December 21, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company on December 22,
2006, SEC File No. 001-32567).10.36
    
    Second Amended and Restated Credit Agreement, dated as of February 28, 2007, among Paramount
Petroleum Corporation, Bank of America, N.A. and certain other guarantor companies and
financial institutions from time to time named therein (incorporated by reference to Exhibit
10.1 to Form 8-K filed by the Company on March 5, 2007, SEC File No. 001-32567).10.37
    
    Management and Consulting Agreement, dated as of August 1, 2003, among Alon USA, Inc., Alon
Israel Oil Company, Ltd. And Alon USA Energy, Inc. (incorporated by reference to Exhibit
10.21 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).
 70




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.38
    
    Amendment, dated as of June 17, 2005, to the Management and Consulting Agreement, dated as
of August 1, 2003, among Alon USA, Inc., Alon Israel Oil Company, Ltd. And Alon USA Energy,
Inc. (incorporated by reference to Exhibit 10.21.1 to Form S-1/A, filed by the Company on
June 17, 2005, SEC File No. 333-124797).10.39
    
    Registration Rights Agreement, dated as of July 6, 2005, between Alon USA Energy, Inc. and
Alon Israel Oil Company, Ltd. (incorporated by reference to Exhibit 10.22 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.40*
    
    Executive Employment Agreement, dated as of July 31, 2000, between Jeff D. Morris and Alon
USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit 10.23 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.41*
    
    Executive Employment Agreement, dated as of July 31, 2000, between Claire A. Hart and Alon
USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit 10.24 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.42*
    
    Executive Employment Agreement, dated as of February 5, 2001, between Joseph A. Concienne,
III and Alon USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit
10.25 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.43*
    
    Management Employment Agreement, dated as of October 1, 2002, between Harlin R. Dean and
Alon USA GP, LLC, as amended on May 4, 2005 (incorporated by reference to Exhibit 10.26 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.44*
    
    Amendment, dated as of October 1, 2003, to the Management Employment Agreement, dated as of
October 1, 2002, between Harlin Dean and Alon USA GP, LLC, as amended on May 4, 2005
(incorporated by reference to Exhibit 10.26.1 to Form S-1/A, filed by the Company on June
17, 2005, SEC File No. 333-124797).10.45*
    
    Amendment to Executive/Management Employment Agreement, dated as of November 7, 2005,
between Harlin Dean and Alon USA GP, LLC (incorporated by reference to Exhibit 10.1 to Form
8-K, filed by the Company on November 8, 2005, SEC File No. 001-32567).10.46*
    
    Amended and Restated Management Employment Agreement, dated as of August 9, 2006, between
Harlin R. Dean and Alon USA GP, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K
filed by the Company on August 9, 2006, SEC File No. 001-32567).10.47*
    
    Management Employment Agreement, dated as of September 1, 2000, between Yosef Israel and
Alon USA GP, LLC (incorporated by reference to Exhibit 10.33 to Form 10-K filed by the
Company on March 15, 2006, SEC File No. 001-32567).10.48*
    
    Amendment to Executive/Management Employment Agreement, dated as of May 1, 2005 between
Yosef Israel and Alon USA GP, LLC (incorporated by reference to Exhibit 10.34 to Form 10-K
filed by the Company on March 15, 2006, SEC File No. 001-32567).10.49*
    
    Executive Employment Agreement, dated as of August 1, 2003 between Shai Even and Alon USA
GP, LLC.10.50*
    
    Annual Cash Bonus Plan (incorporated by reference to Exhibit 10.27 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).
 71




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.51*
    
    Description of 10% Bonus Plan (incorporated by reference to Exhibit 10.28 to Form S-1, filed
by the Company on May 11, 2005, SEC File No. 333-124797).10.52*
    
    Change of Control Incentive Bonus Program (incorporated by reference to Exhibit 10.29 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.53*
    
    Description of Director Compensation (incorporated by reference to Exhibit 10.30 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.54*
    
    Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.31 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.55*
    
    Form of Officer Indemnification Agreement (incorporated by reference to Exhibit 10.32 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.56*
    
    Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit
10.33 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.57
    
    Liquor License Purchase Agreement, dated as of May 12, 2003, between Southwest Convenience
Stores, LLC and SCS Beverage, Inc. (incorporated by reference to Exhibit 10.34 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.58
    
    Premises Lease, dated as of May 12, 2003, between Southwest Convenience Stores, LLC and SCS
Beverage, Inc. (incorporated by reference to Exhibit 10.35 to Form S-1/A, filed by the
Company on June 17, 2005, SEC File No. 333-124797).10.59*
    
    Alon Assets, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.36 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.60*
    
    Alon USA Operating, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.37
to Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.61*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and
Jeff D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.38 to
Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.62
    
    Shareholder Agreement, dated as of July 2000, between Alon Assets, Inc. and Jeff D. Morris,
as amended on June 30, 2002 (incorporated by reference to Exhibit 10.39 to Form S-1/A, filed
by the Company on June 17, 2005, SEC File No. 333-124797).10.63*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon USA Operating,
Inc. and Jeff D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit
10.40 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.64
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon USA Operating, Inc. and Jeff
D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.41 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.65*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and
Claire A. Hart, as amended on June 30, 2002 and July 25, 2002 (incorporated by reference to
Exhibit 10.42 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).
 72




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Exhibit No.
    
    Description of Exhibit10.66
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and Claire A.
Hart, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.43 to Form S-1/A,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.67*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon USA Operating,
Inc. and Claire A. Hart, as amended on June 30, 2002 and July 25, 2002 (incorporated by
reference to Exhibit 10.44 to Form S-1/A, filed by the Company on June 17, 2005, SEC File
No. 333-124797).10.68
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon USA Operating, Inc. and
Claire A. Hart, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.45 to
Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.69*
    
    Incentive Stock Option Agreement, dated as of February 5, 2001, between Alon Assets, Inc.
and Joseph A. Concienne, III, as amended on July 25, 2002 (incorporated by reference to
Exhibit 10.46 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).10.70
    
    Shareholder Agreement, dated as of February 5, 2001, between Alon Assets, Inc. and Joseph A.
Concienne, III (incorporated by reference to Exhibit 10.47 to Form S-1/A, filed by the
Company on June 17, 2005, SEC File No. 333-124797).10.71*
    
    Incentive Stock Option Agreement, dated as of February 5, 2001, between Alon USA Operating,
Inc. and Joseph A. Concienne, III, as amended on July 25, 2002 (incorporated by reference to
Exhibit 10.48 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).10.72
    
    Shareholder Agreement, dated as of February 5, 2001, between Alon USA Operating, Inc. and
Joseph A. Concienne, III (incorporated by reference to Exhibit 10.49 to Form S-1/A, filed by
the Company on June 17, 2005, SEC File No. 333-124797).10.73*
    
    Agreement of Principles of Employment, dated as of July 6, 2005, between David Wiessman and
Alon USA Energy, Inc. (incorporated by reference to Exhibit 10.50 to Form S-1/A, filed by
the Company on July 7, 2005, SEC File No. 333-124797).10.74*
    
    Alon USA Energy, Inc. 2005 Incentive Compensation Plan, as amended on November 7, 2005
(incorporated by reference to Exhibit 10.2 to Form 8-K, filed by the Company on November 8,
2005, SEC File No. 001-32567).10.75*
    
    Agreement, dated as of July 6, 2005, among Alon USA Energy, Inc., Alon USA, Inc., Alon USA
Capital, Inc., Alon USA Operating, Inc., Alon Assets, Inc., Jeff D. Morris, Claire A. Hart
and Joseph A. Concienne, III (incorporated by reference to Exhibit 10.52 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.76*
    
    Form of Restricted Stock Award Agreement relating to Director Grants pursuant to Section 12
of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by the Company on August 5, 2005, SEC File No. 001-32567).10.77*
    
    Form of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section
8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference
to Exhibit 10.1 to Form 8-K filed by the Company on August 23, 2005, SEC File No.
001-32567).10.78*
    
    Form II of Restricted Stock Award Agreement relating to Participant Grants pursuant to
Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.3 to Form 8-K filed by the Company on November 8, 2005, SEC File No.
001-32567).
 73




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.79
    
    Purchase and Sale Agreements, dated as of February 13, 2006, between Alon Petroleum Pipe
Line, LP and Sunoco Pipelines, LP, (incorporated by reference to Exhibit 10.1 to Form 8-K
filed by the Company on February 13, 2006, SEC File No. 001-32567).10.80
    
    Stock Purchase Agreement, dated as of April 28, 2006, among Alon USA Energy, Inc., The Craig
C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The Jerrel C. Barto and
Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy, III and Mark R. Milano
(incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on May 2, 2006,
SEC File No. 001-32567).10.81
    
    First Amendment to Stock Purchase Agreement, dated as of June 30, 2006, among Alon USA
Energy, Inc., The Craig C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The
Jerrel C. Barto and Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy III
and Mark R. Milano (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the
Company on November 14, 2006, SEC File No. 001-32567).10.82
    
    Second Amendment to Stock Purchase Agreement, dated as of July 31, 2006, among Alon USA
Energy, Inc., The Craig C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The
Jerrel C. Barto and Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy III
and Mark R. Milano (incorporated by reference to Exhibit 10.2 to Form 10-Q filed by the
Company on November 14, 2006, SEC File No. 001-32567).10.83
    
    Agreement and Plan of Merger, dated as of April 28, 2006, among Alon USA Energy, Inc., Apex
Oil Company, Inc., Edgington Oil Company, and EOC Acquisition, LLC (incorporated by
reference to Exhibit 10.2 to Form 8-K filed by the Company on May 2, 2006, SEC File No.
001-32567).10.84
    
    Agreement and Plan of Merger, dated March 2, 2007, by and among Alon USA Energy, Inc., Alon
USA Interests, LLC, ALOSKI, LLC, Skinnys, Inc. and the Davis Shareholders (as defined
therein) (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on
March 6, 2007, SEC File No. 001-32567).23.1
    
    Consent of KPMG LLP.31.1
    
    Certifications of Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certifications of Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Identifies management contracts and compensatory plans or arrangements.
    
    Filed under confidential treatment request. 74




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
 PageAudited Consolidated Financial Statements:Reports of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    F-4Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and 2004
    
    
    F-5Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2006,
2005 and 2004
    
    
    F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-9
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Employers Accounting for Defined Benefit
Pension and Other Post Retirement Plans Share-Based Payment
 Internal ControlIntegrated
Framework
 KPMG LLP 
 F-2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
   Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal ControlIntegrated Framework
   KPMG LLP 
 F-3




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands except share data)
 As of December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    64,166
    
    
    $
    136,820Short-term investments
    
    
    
    
    
    
    185,320Accounts and other receivables, net
    
    
    126,634
    
    
    
    89,529Inventories
    
    
    311,464
    
    
    
    79,181Prepaid expenses and other current assets
    
    
    12,909
    
    
    
    6,264Total current assets
    
    
    515,173
    
    
    
    497,114Equity
method investments
    
    
    38,298
    
    
    
    22,754Property, plant, and equipment, net
    
    
    775,836
    
    
    
    211,410Other assets
    
    
    79,478
    
    
    
    27,502Total assets
    
    $
    1,408,785
    
    
    $
    758,780LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    202,447
    
    
    $
    157,076Accrued liabilities
    
    
    66,808
    
    
    
    48,128Current portion of deferred gain on disposition of assets
    
    
    10,400
    
    
    
    11,427Current portion of long-term debt
    
    
    6,739
    
    
    
    4,487Total current liabilities
    
    
    286,394
    
    
    
    221,118Other non-current liabilities
    
    
    65,885
    
    
    
    18,345Deferred gain on disposition of assets
    
    
    42,299
    
    
    
    52,433Long-term debt
    
    
    491,930
    
    
    
    127,903Deferred income tax liability
    
    
    222,415
    
    
    
    52,422Total liabilities
    
    
    1,108,923
    
    
    
    472,221Commitments
and contingencies (Note 20)Minority interest in subsidiaries
    
    
    9,532
    
    
    
    7,066Stockholders equity:Preferred stock, par value $0.01, 10,000,000 shares
authorized; no shares issued and outstanding
    
    
    
    
    
    
    Common stock, par value $0.01, 100,000,000 shares
authorized; 46,806,443 and 46,809,857 shares issued and
outstanding at December 31, 2006 and 2005, respectively
    
    
    468
    
    
    
    468Additional paid-in capital
    
    
    181,622
    
    
    
    181,108Accumulated other comprehensive loss, net of income tax
    
    
    (7,816
    )
    
    
    (2,596
    )Retained earnings
    
    
    116,056
    
    
    
    100,513Total stockholders equity
    
    
    290,330
    
    
    
    279,493Total liabilities and stockholders equity
    
    $
    1,408,785
    
    
    $
    758,780
  F-4




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ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands except per share data)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Net sales
    
    $
    3,198,084
    
    
    $
    2,328,507
    
    
    $
    1,707,564Operating costs and expenses:Cost of sales
    
    
    2,733,698
    
    
    
    1,990,338
    
    
    
    1,469,940Direct operating expenses
    
    
    129,277
    
    
    
    93,843
    
    
    
    75,742Selling, general and administrative expenses
    
    
    84,756
    
    
    
    73,219
    
    
    
    73,554Depreciation and amortization
    
    
    34,274
    
    
    
    20,935
    
    
    
    19,064Total operating costs and expenses
    
    
    2,982,005
    
    
    
    2,178,335
    
    
    
    1,638,300Gain on disposition of assets
    
    
    63,255
    
    
    
    38,591
    
    
    
    175Operating income
    
    
    279,334
    
    
    
    188,763
    
    
    
    69,439Interest expense
    
    
    (30,658
    )
    
    
    (19,326
    )
    
    
    (23,704
    )Equity
earnings of investees
    
    
    3,161
    
    
    
    1,086
    
    
    
    Other income, net
    
    
    7,740
    
    
    
    4,775
    
    
    
    277Income before income tax expense and minority interest
in income of subsidiaries
    
    
    259,577
    
    
    
    175,298
    
    
    
    46,012Income tax expense
    
    
    93,968
    
    
    
    65,518
    
    
    
    18,315Income before minority interest in income of subsidiaries
    
    
    165,609
    
    
    
    109,780
    
    
    
    27,697Minority interest in income of subsidiaries
    
    
    8,241
    
    
    
    5,792
    
    
    
    2,565Net income
    
    $
    157,368
    
    
    $
    103,988
    
    
    $
    25,132Earnings per share
    
    $
    3.37
    
    
    $
    2.61
    
    
    $
    .72Weighted average shares outstanding
    
    
    46,738
    
    
    
    39,889
    
    
    
    35,001Cash
dividends per share
    
    $
    3.03
    
    

    $
    1.96
    
    
    $
    
  F-5




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 (dollars in thousands)
 AccumulatedAdditional
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Comprehensive
    
    
    RetainedStock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    TotalBalance at January 1, 2004
    
        $
    350
    
    
    $
    8,239
    
    
    $
    (1,538
    )
    
    $
    39,872
    
    
    $
    46,923Received for shares issued
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    140Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,132
    
    
    
    25,132Other comprehensive loss:Minimum pension liability, net of income tax
    
    
    
    
    
    
    
    
    
    
    (723
    )
    
    
    
    
    
    
    (723
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,409Balance at December 31, 2004
    
    
    350
    
    
    
    8,379
    
    
    
    (2,261
    )
    
    
    65,004
    
    
    
    71,472Proceeds from sale of common stock, net
    
    
    118
    
    
    
    172,729
    
    
    
    
    
    
    
    
    
    
    
    172,847Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68,479
    )
    
    
    (68,479
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,988
    
    
    
    103,988Other comprehensive loss:Minimum pension liability, net of income tax
    
    
    
    
    
    
    
    
    
    
    (335
    )
    
    
    
    
    
    
    (335
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,653Balance at December 31, 2005
    
    
    468
    
    
    
    181,108
    
    
    
    (2,596
    )
    
    
    100,513
    
    
    
    279,493Stock
compensation expense
    
    
    
    
    
    
    514
    
    
    
    
    
    
    
    
    
    
    
    514Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141,825
    )
    
    
    (141,825
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,368
    
    
    
    157,368Other comprehensive loss:Minimum pension liability, net of income tax
    
    
    
    
    
    
    
    
    
    
    (558
    )
    
    
    
    
    
    
    (558
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,810Adjustment to initially apply FASB Statement
No. 158, net of tax
    
    
    
    
    
    
    
    
    
    
    (4,662
    )
    
    
    
    
    
    
    (4,662
    )Balance at December 31, 2006
    
    $
    468
    
    
    $
    181,622
    
    
    $
    (7,816
    )
    
    $
    116,056
    
    
    $
    290,330
  F-6




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    157,368
    
    
    $
    103,988
    
    
    $
    25,132Adjustments to reconcile net income to cash provided by
operating activities:Depreciation and amortization
    
    
    34,274
    
    
    
    20,935
    
    
    
    19,064Stock option compensation
    
    
    2,445
    
    
    
    2,336
    
    
    
    530Deferred income tax expense
    
    
    8,264
    
    
    
    16,646
    
    
    
    1,669Minority interest in income of subsidiaries
    
    
    8,241
    
    
    
    5,792
    
    
    
    2,565Equity
earnings of investees (net of dividends)
    
    
    (739
    )
    
    
    
    
    
    
    Accrued interest on subordinated notes to stockholders
    
    
    
    
    
    
    
    
    
    
    3,815Gain on disposition of assets
    
    
    (63,255
    )
    
    
    (38,591
    )
    
    
    (175
    )Changes in
operating assets and liabilities, net of acquisition effects:Accounts and other receivables, net
    
    
    68,900
    
    
    
    (20,201
    )
    
    
    (9,514
    )Inventories
    
    
    (20,490
    )
    
    
    148
    
    
    
    (4,256
    )Prepaid expenses and other current assets
    
    
    9,639
    
    
    
    (2,107
    )
    
    
    2,575Other assets
    
    
    26,217
    
    
    
    1,279
    
    
    
    1,871Accounts payable
    
    
    (88,664
    )
    
    
    52,895
    
    
    
    17,245Accrued liabilities
    
    
    (13,787
    )
    
    
    (2,718
    )
    
    
    17,902Other non-current liabilities
    
    
    14,564
    
    
    
    (2,507
    )
    
    
    (1,680
    )Net cash provided by operating activities
    
    
    142,977
    
    
    
    137,895
    
    
    
    76,743Cash flows from investing activities:Capital expenditures
    
    
    (39,832
    )
    
    
    (23,034
    )
    
    
    (27,301
    )Capital expenditures for turnarounds and catalysts
    
    
    (3,940
    )
    
    
    (12,041
    )
    
    
    (2,322
    )Proceeds from disposition of assets
    
    
    68,009
    
    
    
    118,000
    
    
    
    317Sale (purchase) of short-term investments, net
    
    
    185,320
    
    
    
    (185,320
    )
    
    
    Acquisition of minority interest in subsidiary
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Acquisition of assets from Good Time stores
    
    
    (27,024
    )
    
    
    
    
    
    
    Acquisition of Paramount Petroleum Corporation stock
    
    
    (504,655
    )
    
    
    
    
    
    
    Acquisition of assets from Edgington Oil Company
    
    
    (98,762
    )
    
    
    
    
    
    
    Acquisition of asphalt business
    
    
    
    
    
    
    
    
    
    
    (580
    )Dividends from investment in HEP (net of equity earnings in HEP)
    
    
    
    
    
    
    531
    
    
    
    Minority interest shares purchased
    
    
    (186
    )
    
    
    (5,098
    )
    
    
    Net cash used in investing activities
    
    
    (421,070
    )
    
    
    (106,962
    )
    
    
    (39,886
    )Cash flows from financing activities:Proceeds from sale of common stock, net
    
    
    
    
    
    
    172,459
    
    
    
    140Dividends paid to minority interest shareholders
    
    
    (7,968
    )
    
    
    (6,134
    )
    
    
    Dividends paid to shareholders
    
    
    (141,825
    )
    
    
    (68,479
    )
    
    
    Deferred debt issuance costs
    
    
    (11,047
    )
    
    
    
    
    
    
    (1,885
    )Revolving credit facilities, net
    
    
    19,798
    
    
    
    
    
    
    
    (19,600
    )Additions to long-term debt
    
    
    500,000
    
    
    
    2,936
    
    
    
    100,671Payments on long-term debt
    
    
    (153,519
    )
    
    
    (58,252
    )
    
    
    (60,082
    )Net cash provided by financing activities
    
    
    205,439
    
    
    
    42,530
    
    
    
    19,244Net (decrease) increase in cash and cash equivalents
    
    
    (72,654
    )
    
    
    73,463
    
    
    
    56,101Cash and cash equivalents, beginning of period
    
    
    136,820
    
    
    
    63,357
    
    
    
    7,256Cash and cash equivalents, end of period
    
    $
    64,166
    
    
    $
    136,820
    
    
    $
    63,357
  F-7




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##### Table of Contents



Year Ended December 31,2006
    
    
    2005
    
    
    2004Supplemental cash flow information:Cash paid for interest, net of capitalized interest
    
    $
    20,301
    
    
    $
    18,736
    
    
    $
    20,536Cash paid for income tax
    
    $
    83,291
    
    
    $
    44,523
    
    
    $
    15,701Non-cash activities:Investing activity  receipt of Class B HEP
subordinated units as proceeds from disposition of
assets
    
    $
    
    
    
    $
    30,000
    
    
    $
    
  F-8




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 (1) Description and Nature of Business
   Refining and Marketing Segment
   Asphalt Segment
  Retail Segment
 F-9




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 (2) Summary of Significant Accounting Policies
 (a) Basis of Presentation
   (b) Use of Estimates
  (c) Revenue Recognition
     (d) Cost Classifications
  F-10




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
     (e) Cash and Cash Equivalents
  (f) Short-Term Investments
  (g) Accounts Receivable
  (h) Inventories
  F-11




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 (i) Hedging Activity
 Accounting for
Derivative Instruments and Hedging Activities
 (j) HEP Investment
  (k) Property, Plant, and Equipment
     (l) Impairment of Long-Lived Assets and Assets To Be Disposed Of
  (m) Asset Retirement Obligations
 Accounting for Asset Retirement
Obligations
 F-12




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 Accounting for Conditional Retirement
Obligations
 (n) Turnarounds and Chemical Catalyst Costs
  (o) Income Taxes
  (p) Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation
 Accounting for Stock Issued to
Employees
  (q) Environmental Expenditures
  F-13




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  (r) Earnings Per Share
  (s) Other Comprehensive Income
  (t) Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
   Before
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    Application ofStatement 158
    
    Adjustments
    
    Statement 158Liabilities for pension benefits
    
    $
    1,806
    
    
    $
    
    
    
    $
    1,806Long term liabilities for pension benefits
    
    
    4,926
    
    
    
    7,318
    
    
    
    12,244Deferred
income taxes
    
    
    1,897
    
    
    
    2,631
    
    
    
    4,528Accumulated other comprehensive income
    
    
    3,154
    
    
    
    4,662
    
    
    
    7,816
 (u) Commitments and Contingencies
  F-14




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 Offsetting of Amounts Related to Certain Contracts
 (v) Goodwill and Intangible Assets
  (w) New Accounting Standards and Disclosures
 Share-Based
Payment
 Accounting for Stock Issued to
Employees
 Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109
 Inventory Costs
 F-15




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions
 Accounting Changes and Error Corrections
 Accounting for Conditional Retirement
Obligations
 Application of FASB
Statement No. 109, Accounting for Income Taxes, for the Tax Deduction Provided to U.S. Based
Manufacturers by the American Jobs Creation Act of 2004 Accounting for Income
Taxes
 Accounting for
Purchases and Sales of Inventory with the Same Counterparty
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
 SEC
Staff Guidance  Quantifying Financial Statement Misstatements
 F-16




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 (3) Initial Public Offering of Alon
   (4) Acquisition s
 Good Time Stores Acquisition
    Cash paid
    
    $
    26,043Transaction costs
    
    
    981Total Purchase Price
    
    $
    27,024
  Inventories and other current assets
    
    $
    2,693Property, plant and equipment
    
    
    5,014Intangible assets
    
    
    4,000Goodwill
    
    
    15,317Total Purchase Price
    
    $
    27,024
  Paramount Acquisition
  F-17




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
   Cash paid, less unrestricted cash acquired
    
    $
    501,056Transaction costs
    
    
    3,599Total Purchase Price
    
    $
    504,655
  Current assets, net of unrestricted cash acquired
    
    $
    308,135Property, plant and equipment
    
    
    499,179Deferred charges and other assets
    
    
    23,503Equity
method investments
    
    
    15,836Intangibles
    
    
    16,098Current liabilities, excluding debt
    
    
    (165,824
    )Deferred income tax liability
    
    
    (166,535
    )Other liabilities
    
    
    (25,737
    )Total Purchase Price
    
    $
    504,655
  Unaudited Pro Forma Financial Information
  
    
    The acquisition of Paramount Petroleum Corporation occurred on January 1, 2005;
    
    $400,000 of term debt was incurred to fund the Paramount Petroleum Corporation
acquisition on January 1, 2005 and existing Paramount Petroleum Corporation debt was repaid
on this date; and
    
    Depreciation expense was higher beginning January 1, 2005 for the higher estimated asset
values as of that date.
  For the Year EndedDecember 31,2006
    
    
    2005Net sales
    
    $
    4,058,334
    
    
    $
    3,532,215Operating income
    
    
    288,886
    
    
    
    181,966Net income
    
    
    152,795
    
    
    
    82,557Earnings per share
    
    $
    3.27
    
    
    $
    2.07
 F-18




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 Edgington Acquisition
   Cash paid
    
    $
    97,599Transaction costs
    
    
    1,163Total Purchase Price
    
    $
    98,762The purchase
price was allocated as follows:Current assets, net of unrestricted cash acquired
    
    $
    1,000Inventories
    
    
    34,405Property, plant and equipment
    
    
    63,357Total Purchase Price
    
    $
    98,762
  (5) Sale of Pipelines and Terminals
 HEP Transaction
  F-19




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
    (6) Segment Data
  (a) Refining and Marketing Segment
  F-20




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  (b) Asphalt
  (c) Retail Segment
  (d) Corporate
   Refining andYear ended December 31, 2006
    
    Marketing
    
    Asphalt
    
    Retail
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    2,456,957
    
    
    $
    389,634
    
    
    $
    351,493
    
    
    $
    
    
    
    $
    3,198,084Intersegment sales/purchases
    
    
    392,180
    
    
    
    (245,434
    )
    
    
    (146,746
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    24,961
    
    
    
    2,247
    
    
    
    5,453
    
    
    
    1,613
    
    
    
    34,274Operating income (loss)
    
    
    268,105
    
    
    
    11,171
    
    
    
    2,182
    
    
    
    (2,124
    )
    
    
    279,334Total assets
    
    
    1,154,958
    
    
    
    144,871
    
    
    
    98,649
    
    
    
    10,307
    
    
    
    1,408,785Turnaround, chemical catalyst and capital expenditures
    
    
    31,680
    
    
    
    3,156
    
    
    
    8,748
    
    
    
    188
    
    
    
    43,772Refining andYear ended December 31, 2005
    
    Marketing
    
    Asphalt
    
    Retail
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    1,887,060
    
    
    $
    114,910
    
    
    $
    326,537
    
    
    $
    
    
    
    $
    2,328,507Intersegment sales/purchases
    
    
    249,747
    
    
    
    (104,327
    )
    
    
    (145,420
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    14,330
    
    
    
    134
    
    
    
    4,557
    
    
    
    1,914
    
    
    
    20,935Operating income (loss)
    
    
    204,816
    
    
    
    (16,573
    )
    
    
    2,925
    
    
    
    (2,405
    )
    
    
    188,763Total assets
    
    
    657,991
    
    
    
    18,759
    
    
    
    69,794
    
    
    
    12,236
    
    
    
    758,780Turnaround, chemical catalyst and capital expenditures
    
    
    30,951
    
    
    
    170
    
    
    
    3,484
    
    
    
    470
    
    
    
    35,075Refining andYear ended December 31, 2004
    
    Marketing
    
    Asphalt
    
    Retail
    
    Corporate
    
    TotalNet sales to external customers
    
    $
    1,325,852
    
    
    $
    80,221
    
    
    $
    301,491
    
    
    $
    
    
    
    $
    1,707,564Intersegment sales/purchases
    
    
    193,659
    
    
    
    (75,882
    )
    
    
    (117,777
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    13,194
    
    
    
    198
    
    
    
    4,192
    
    
    
    1,480
    
    
    
    19,064Operating income (loss)
    
    
    68,759
    
    
    
    (148
    )
    
    
    2,897
    
    
    
    (2,069
    )
    
    
    69,439Total assets
    
    
    373,350
    
    
    
    16,480
    
    
    
    69,949
    
    
    
    12,737
    
    
    
    472,516Turnaround, chemical catalyst and capital expenditures
    
    
    25,619
    
    
    
    258
    
    
    
    3,134
    
    
    
    612
    
    
    
    29,623
 F-21




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
   (7) Derivatives and Hedging Activities
 (a) Fair Value of Financial Instruments
  (b) Derivative Financial Instruments
  Commodity Instruments
     F-22




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 (8) Accounts Receivable
  (9) Inventories
   December 31,2006
    
    
    2005Crude oil, refined products, asphalt and blendstocks
    
    $
    286,092
    
    
    $
    57,822Materials and supplies
    
    
    6,281
    
    
    
    5,880Store merchandise
    
    
    15,905
    
    
    
    12,977Store fuel
    
    
    3,186
    
    
    
    2,502Total inventories
    
    $
    311,464
    
    
    $
    79,181
   (10) Property, Plant, and Equipment, Net
  December 31,2006
    
    
    2005Refining facilities
    
    $
    730,036
    
    
    $
    171,346Pipelines and terminals
    
    
    40,108
    
    
    
    27,237Retail
    
    
    78,722
    
    
    
    63,486Other
    
    
    10,700
    
    
    
    10,691Property, plant and equipment, gross
    
    
    859,566
    
    
    
    272,760Less accumulated depreciation
    
    
    (83,730
    )
    
    
    (61,350
    )Property, plant and equipment, net
    
    $
    775,836
    
    
    $
    211,410
  Refining facilities
    
    3  20 years; average 18 yearsPipelines and terminals
    
    5  25 years; average 23 yearsRetail
    
    5  40 years; average 18 yearsOther
    
    3  15 years; average 5 years
 F-23




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  (11) Other Assets
  December 31,2006
    
    
    2005Deferred turnaround, chemical catalyst cost
    
    $
    12,797
    
    
    $
    9,865Environmental receivables
    
    
    11,853
    
    
    
    3,257Deferred debt issuance costs
    
    
    10,769
    
    
    
    6,529Goodwill
    
    
    15,317
    
    
    
    Intangible assets
    
    
    20,696
    
    
    
    3,429Other
    
    
    8,046
    
    
    
    4,422Total other assets
    
    $
    79,478
    
    
    $
    27,502
   (12) Accrued Liabilities
  December 31,2006
    
    
    2005Accrued Liabilities  Current:Taxes other than income taxes, primarily excise taxes
    
    $
    19,666
    
    
    $
    21,206Income taxes payable
    
    
    8,878
    
    
    
    7,239Employee costs
    
    
    4,373
    
    
    
    4,977Other
    
    
    33,891
    
    
    
    14,706Total accrued liabilities
    
    $
    66,808
    
    
    $
    48,128
 F-24




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 December 31,2006
    
    
    2005Accrued Liabilities  Non-Current:Pension and other postemployment benefit liabilities, net (Note 13)
    
    $
    18,678
    
    
    $
    10,611Environmental accrual (Note 20)
    
    
    38,349
    
    
    
    2,986Asset retirement obligation
    
    
    6,216
    
    
    
    2,211Other
    
    
    2,642
    
    
    
    2,537Total other non-current liabilities
    
    $
    65,885
    
    
    $
    18,345
 Accounting for Asset
Retirement Obligations
 December 31,2006
    
    
    2005Balance at beginning of year
    
    $
    2,211
    
    
    $
    2,524Accretion expense
    
    
    145
    
    
    
    53Additional accretion due to change in risk free interest rate
    
    
    394
    
    
    
    Retirements
    
    
    (124
    )
    
    
    (366
    )Additions
    
    
    3,590
    
    
    
    Balance at end of year
    
    $
    6,216
    
    
    $
    2,211
  (13) Employee and Postretirement Benefits
   Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003
 F-25




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  Pension Benefits
    
    
    Postretirement Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Change in projected benefit obligation:Benefit obligation at beginning of year
    
    $
    39,100
    
    
    $
    31,772
    
    
    $
    1,755
    
    
    $
    1,852Service cost
    
    
    1,867
    
    
    
    1,694
    
    
    
    74
    
    
    
    75Interest cost
    
    
    2,325
    
    
    
    2,068
    
    
    
    107
    
    
    
    112Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan amendments
    
    
    (1,033
    )
    
    
    127
    
    
    
    (217
    )
    
    
    Actuarial loss (gain)
    
    
    3,713
    
    
    
    4,113
    
    
    
    114
    
    
    
    (110
    )Benefits paid
    
    
    (800
    )
    
    
    (674
    )
    
    
    (199
    )
    
    
    (174
    )Projected benefit obligations at end of year
    
    $
    45,172
    
    
    $
    39,100
    
    
    $
    1,634
    
    
    $
    1,755Change in plan assets:Fair value of plan assets at beginning of period
    
    
    24,677
    
    
    
    20,114
    
    
    
    
    
    
    
    Actual gain on plan assets
    
    
    4,410
    
    
    
    1,883
    
    
    
    
    
    
    
    Employer contribution
    
    
    2,835
    
    
    
    3,354
    
    
    
    199
    
    
    
    174Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Benefits paid
    
    
    (800
    )
    
    
    (674
    )
    
    
    (199
    )
    
    
    (174
    )Fair value of plan assets at end of period
    
    $
    31,122
    
    
    $
    24,677
    
    
    $
    
    
    
    $
    Reconciliation of funded status:Fair value of plan assets at end of year
    
    $
    31,122
    
    
    $
    24,677
    
    
    $
    
    
    
    $
    Less benefit obligation at end of year
    
    
    45,172
    
    
    
    39,100
    
    
    
    1,634
    
    
    
    1,755Funded status at end of year
    
    $
    (14,050
    )
    
    
    (14,423
    )
    
    $
    (1,634
    )
    
    
    (1,755
    )Unrecognized prior service costs
    
    
    n/a
    
    
    
    100
    
    
    
    n/a
    
    
    
    (3,804
    )Unrecognized net actuarial loss
    
    
    n/a
    
    
    
    11,983
    
    
    
    n/a
    
    
    
    1,005Accrued benefit costs
    
    
    n/a
    
    
    $
    (2,340
    )
    
    
    n/a
    
    
    $
    (4,554
    )
  Pension Benefits
    
    
    Postretirement Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Amounts recognized in the consolidated balance sheets:Accrued benefit liability
    
    $
    (6,732
    )
    
    $
    (6,656
    )
    
    $
    (2,649
    )
    
    $
    (4,554
    )Intangible asset
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    4,926
    
    
    
    4,222
    
    
    
    (1,635
    )
    
    
    Accrued pension cost
    
    $
    (1,806
    )
    
    $
    (2,340
    )
    
    $
    (4,284
    )
    
    $
    (4,554
    )The pre-tax amounts in accumulated other comprehensive income (loss) as of December 31, 2006
that have not yet been recognized as components of net periodic benefit cost were as follows:Pension Benefits
    
    
    Postretirement Benefits2006
    
    
    
    
    
    
    2006Net actuarial loss
    
    $
    (12,769
    )
    
    
    
    
    
    $
    (1,058
    )Prior service (costs)/credit
    
    
    525
    
    
    
    
    
    
    
    3,708Accrued benefit costs
    
    $
    (12,244
    )
    
    
    
    
    
    $
    2,650
 F-26




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  December 31,2006
    
    2005Projected benefit obligation
    
    $
    45,172
    
    
    $
    39,100Accumulated benefit obligation
    
    
    37,854
    
    
    
    31,333Fair value of plan assets
    
    
    31,122
    
    
    
    24,677
  Pension Benefits
    
    Postretirement Benefits2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.00
    %Rate of
compensation
increase
    
    
    3.50
    %
    
    
    3.50
    %
    
    
    3.00
    %
    
    
    
    
    
    
    
    
    
    
    
  Pension Benefits
    
    Postretirement Benefits2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Discount rate
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected return on
plan assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    
    
    
    
    
    
    
    
    Rate of
compensation
increase
    
    
    3.50
    %
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    
    
    
    
    
    
    
    
    
   Pension Benefits
    
    
    Postretirement BenefitsYear Ended December 31
    
    
    Year Ended December 312006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Components
of net periodic Benefit cost:Service cost
    
    $
    1,867
    
    
    $
    1,694
    
    
    $
    1,326
    
    
    $
    74
    
    
    $
    75
    
    
    $
    160Interest cost
    
    
    2,325
    
    
    
    2,068
    
    
    
    1,826
    
    
    
    107
    
    
    
    112
    
    
    
    222Amortization of prior service
costs
    
    
    63
    
    
    
    27
    
    
    
    
    
    
    
    (314
    )
    
    
    (314
    )
    
    
    (157
    )Expected return on plan assets
    
    
    (2,371
    )
    
    
    (1,996
    )
    
    
    (1,388
    )
    
    
    
    
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    573
    
    
    
    544
    
    
    
    563
    
    
    
    61
    
    
    
    67
    
    
    
    29Net periodic benefit cost
    
    $
    2,457
    
    
    $
    2,337
    
    
    $
    2,327
    
    
    $
    (72
    )
    
    $
    (60
    )
    
    $
    254
 Plan Assets
  Pension BenefitsPlan Assets2006
    
    2005Asset Category:Equity securities
    
    
    76.0
    %
    
    
    82.0
    %Debt securities
    
    
    13.0
    %
    
    
    8.0
    %Real estate investment trust
    
    
    11.0
    %
    
    
    10.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
 F-27




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  Cash Flows
   Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans Employers
Accounting for Pensions Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits Employers
Accounting for Postretirement Benefits Other Than Pensions Employers Disclosures about Pensions and Other Postretirement Benefits
   Before
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    Application ofStatement 158
    
    Adjustments
    
    Statement 158Liabilities for pension benefits
    
    $
    1,806
    
    
    $
    
    
    
    $
    1,806Long term liabilities for pension benefits
    
    
    4,926
    
    
    
    7,318
    
    
    
    12,244Deferred income taxes
    
    
    1,897
    
    
    
    2,631
    
    
    
    4,528Accumulated other comprehensive income
    
    
    3,154
    
    
    
    4,662
    
    
    
    7,816
  F-28




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
  (14) Long-Term Debt
  December 31,2006
    
    
    2005Term loan credit facility
    
    $
    447,750
    
    
    $
    Secured term loan
    
    
    
    
    
    
    100,000Revolving credit facilities
    
    
    
    
    
    
    Retail credit facilities
    
    
    50,919
    
    
    
    Retail mortgages and equipment loans
    
    
    
    
    
    
    32,390Total debt
    
    
    498,669
    
    
    
    132,390Less current portion
    
    
    (6,739
    )
    
    
    (4,487
    )Total long-term debt
    
    $
    491,930
    
    
    $
    127,903
 (a) Term Loan Credit Facility
      F-29




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (dollars in thousands except as noted)
 (b) Secured Term Loan
   (c) Revolving Credit Facilities
 Israel Discount Bank Credit Facility
   Bank of America Credit Facility.
  F-30




---



##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
  (d) Retail Credit Facility
      (e) Retail Mortgages and Equipment Loans
   F-31




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 (f) Maturity of Long-Term Debt
  (g) Interest and Financing Expense
  December 31,2006
    
    
    2005
    
    
    2004Interest expense
    
    $
    17,685
    
    
    $
    15,422
    
    
    $
    19,261Letters of credit and finance costs
    
    
    6,333
    
    
    
    3,385
    
    
    
    3,415Amortization
of debt issuance costs (includes write off of debt costs of $6,091 in
2006)
    
    
    6,640
    
    
    
    1,446
    
    
    
    1,329Capitalized interest
    
    
    
    
    
    
    (927
    )
    
    
    (301
    )Total interest expense
    
    $
    30,658
    
    
    $
    19,326
    
    
    $
    23,704
 (15) Income Taxes
  December 31,2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    77,372
    
    
    $
    41,886
    
    
    $
    15,554State
    
    
    8,332
    
    
    
    6,986
    
    
    
    1,092Total current
    
    
    85,704
    
    
    
    48,872
    
    
    
    16,646Deferred:Federal
    
    
    5,035
    
    
    
    16,009
    
    
    
    1,487State
    
    
    3,229
    
    
    
    637
    
    
    
    182Total deferred
    
    
    8,264
    
    
    
    16,646
    
    
    
    1,669Income tax expense
    
    $
    93,968
    
    
    $
    65,518
    
    
    $
    18,315
  December 31,2006
    
    
    2005
    
    
    2004Computed expected tax expense
    
    $
    90,852
    
    
    $
    61,481
    
    
    $
    16,104State and local income taxes, net of federal benefit
    
    
    7,516
    
    
    
    4,895
    
    
    
    828Deduction for qualified production income
    
    
    (2,049
    )
    
    
    (1,111
    )
    
    
    Low-sulfur diesel tax credit
    
    
    (2,918
    )
    
    
    
    
    
    
    Other, net
    
    
    567
    
    
    
    253
    
    
    
    1,383Income tax expense
    
    $
    93,968
    
    
    $
    65,518
    
    
    $
    18,315
 F-32




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 December 31,2006
    
    
    2005Deferred income tax assets:Accounts receivable, allowance
    
    $
    855
    
    
    $
    327Deferred gain
    
    
    3,640
    
    
    
    2,009Accrued liabilities and other
    
    
    1,918
    
    
    
    205Post retirement benefits
    
    
    3,840
    
    
    
    1,742Noncurrent accrued liabilities and other
    
    
    8,018
    
    
    
    841Net operating loss carryover
    
    
    11,569
    
    
    
    Tax credits
    
    
    1,280
    
    
    
    Other
    
    
    338
    
    
    
    Deferred income tax assets
    
    
    31,458
    
    
    
    5,124Deferred income tax liabilities:Deferred charges
    
    
    (2,931
    )
    
    
    Intangibles
    
    
    (6,081
    )
    
    
    Property, plant, and equipment
    
    
    (198,104
    )
    
    
    (35,370
    )Other noncurrent
    
    
    (32,550
    )
    
    
    (19,635
    )Inventories
    
    
    (16,904
    )
    
    
    (826
    )Deferred income tax liabilities
    
    $
    (256,570
    )
    
    $
    (55,831
    )
  (16) Related-Party Transactions
   (17) Stockholders Equity
 (a) Common and preferred stock
  F-33




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 CommonStock(in thousands)Balance as of January 1, 2004
    
    
    35,001Balance as of December 31, 2004
    
    
    35,001Sale of Common Stock
    
    
    11,730Shares issued in connection with stock plans (Note 19)
    
    
    79Balance as of December 31, 2005
    
    
    46,810Shares forfeited
    
    
    (6
    )Shares issued in connection with stock plans (Note 19)
    
    
    2Balance as of December 31, 2006
    
    
    46,806
 (b) Initial Public Offering
  (c) Stock Split
  (d) Dividends
  Common Stock Dividends
   F-34




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 (18) Earnings per Share
  December 312006
    
    
    2005
    
    
    2004Net income
    
    $
    157,368
    
    
    $
    103,988
    
    
    $
    25,132Average number of shares of common stock outstanding
    
    
    46,738
    
    
    
    39,889
    
    
    
    35,001Effect of dilutive restricted shares
    
    
    41
    
    
    
    19
    
    
    
    Average number of shares of common stock outstanding assuming dilution
    
    
    46,779
    
    
    
    39,908
    
    
    
    35,001Earnings per share  basic
    
    $
    3.37
    
    
    $
    2.61
    
    
    $
    .72Earnings per share  diluted
    
    $
    3.36
    
    
    $
    2.61
    
    
    $
    .72
 (19) Stock Based Compensation
  (a) 2005 Incentive Compensation Plan (share value in dollars)
    F-35




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##### Table of Contents





ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 Weighted AverageNonvested Shares
    
    Shares
    
    
    Grant Date Fair ValuesNonvested at January 1, 2006
    
    
    78,737
    
    
    $
    19.73Granted
    
    
    2,253
    
    
    
    33.29Vested
    
    
    (26,244
    )
    
    
    19.73Forfeited
    
    
    (5,667
    )
    
    
    20.42Nonvested at December 31, 2006
    
    
    49,079
    
    
    $
    20.27
  (b) 2000 Incentive Stock Compensation Plan
   Alon Assets
    
    
    Alon OperatingWeighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    ExerciseOutstanding
    
    
    Price
    
    
    Outstanding
    
    
    PriceOutstanding at January 1, 2005
    
    
    9,272
    
    
    $
    100
    
    
    
    3,482
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (1,212
    )
    
    
    100
    
    
    
    (455
    )
    
    
    100Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    
    8,060
    
    
    $
    100
    
    
    
    3,027
    
    
    $
    100Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (1,212
    )
    
    
    100
    
    
    
    (455
    )
    
    
    100Forfeited and expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2006
    
    $
    6,848
    
    
    $
    100
    
    
    $
    2,572
    
    
    $
    100
  (c) Stock Warrants
  F-36




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
 (20) Commitments and Contingencies
 (a) Leases
  Year ending December 31:2007
    
    $
    24,1052008
    
    
    20,1222009
    
    
    18,4072010
    
    
    17,1312011
    
    
    13,1142012 and thereafter
    
    
    63,760Total
    
    $
    156,639
  (b) Other Commitments
     F-37




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
  (c) Environmental
      F-38




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##### Table of Contents



ALON USA ENERGY, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands except as noted)
   (21) Quarterly Information (unaudited)
  QuartersFirst
    
    Second
    
    Third
    
    Fourth
    
    Total Year2006Net sales
    
    $
    584,701
    
    
    $
    672,262
    
    
    $
    1,020,887
    
    
    $
    920,234
    
    
    $
    3,198,084Operating income
    
    
    96,013
    
    
    
    69,926
    
    
    
    71,765
    
    
    
    41,630
    
    
    
    279,334Net income
    
    
    54,164
    
    
    
    43,091
    
    
    
    38,143
    
    
    
    21,970
    
    
    
    157,368Earnings per share
    
    $
    1.16
    
    
    $
    0.92
    
    
    $
    0.82
    
    
    $
    0.47
    
    
    $
    3.37Weighted average shares outstanding
    
    
    46,731
    
    
    
    46,733
    
    
    
    46,737
    
    
    
    46,751
    
    
    
    46,7382005Net sales
    
    $
    407,974
    
    
    $
    590,366
    
    
    $
    648,135
    
    
    $
    682,032
    
    
    $
    2,328,507Operating income
    
    
    44,278
    
    
    
    49,475
    
    
    
    44,232
    
    
    
    50,778
    
    
    
    188,763Net income
    
    
    22,436
    
    
    
    27,482
    
    
    
    24,388
    
    
    
    29,682
    
    
    
    103,988Earnings per share, basic(1)
    
    $
    .64
    
    
    $
    .79
    
    
    $
    .57
    
    
    $
    .64
    
    
    $
    2.61Weighted average shares outstanding(1)
    
    
    35,001
    
    
    
    35,001
    
    
    
    42,821
    
    
    
    46,731
    
    
    
    39,889
 
 (1)
    
    Weighted average shares outstanding and earnings per share for the periods presented reflect
the effect of a 33,600-for-one split of Alons common shares which was effected on July 6,
2005. On August 2, 2005 Alon completed an initial public offering 11,730,000 shares of its
common stock. The shares issued in our initial public offering are reflected in the number of
weighted average shares outstanding for the quarters and years ended December 31, 2006 and
December 31, 2005. (22) Subsequent Events
 (a) Dividend Announcement
  (b) Skinnys Acquisition
  (c) Debt
Agreement
  F-39




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##### Table of Contents



SIGNATURES
  By:
    
    /s/ Jeff D. MorrisDate:
March 14, 2007
    
    
    
    Jeff D. MorrisChief Executive Officer
  Date:
March 14, 2007
    
    By:
    
    /s/ David WiessmanDavid WiessmanExecutive ChairmanDate:
March 14, 2007
    
    By:
    
    /s/ Jeff D. MorrisJeff D. MorrisPresident, Chief Executive Officer and DirectorDate:
March 14, 2007
    
    By:
    
    /s/ Shai EvenShai EvenVice President, Chief Financial Officer and TreasurerDate:
March 14, 2007
    
    By:
    
    /s/ Ron W. HaddockRon W. HaddockDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Itzhak BaderItzhak BaderDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Shaul GliksbergShaul GliksbergDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Avraham Baiga ShochatAvraham Baiga ShochatDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Yeshayahu PeryYeshayahu PeryDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Zalman SegalZalman SegalDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Boaz BiranBoaz BiranDirectorDate:
March 14, 2007
    
    By:
    
    /s/ Erez MeltzerErez MeltzerDirector




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit3.1
    
    Amended Restated Certificate of Incorporation of Alon USA Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Form S-1/A, filed by the Company on July 7, 2005, SEC File No.
333-124797).3.2
    
    Amended and Restated Bylaws of Alon USA Energy, Inc. (incorporated by reference to Exhibit
3.2 to Form S-1/A, filed by the Company on July 14, 2005, SEC File No. 333-124797).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Form S-1/A,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.1 
    
    Area License Agreement, dated as of June 2, 1993, between Southwest Convenience Stores, Inc.
and The Southland Corporation (incorporated by reference to Exhibit 10.1 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.2 
    
    Amendment to Area License Agreement and Consent to Assignment, dated as of December 20,
1996, between The Southland Corporation and Permian Basin Investments, Inc. d/b/a Southwest
Convenience Stores, Inc. (incorporated by reference to Exhibit 10.2.1 to Form S-1/A, filed
by the Company on July 7, 2005, SEC File No. 333-124797).10.3 
    
    Amendment No. 2 to Area License Agreement, dated as of August 14, 1997, between Southwest
Convenience Stores LLC and The Southland Corporation (incorporated by reference to Exhibit
10.2.2 to Form S-1/A, filed by the Company on July 7, 2005, SEC File No. 333-124797).10.4
    
    Trademark License Agreement, dated as of June 31, 2000, among Finamark, Inc., Atofina
Petrochemicals, Inc. and SWBU, L.P. (incorporated by reference to Exhibit 10.3 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).10.5
    
    First Amendment to Trademark License Agreement, dated as of April 11, 2001, among Finamark,
Inc., Atofina Petrochemicals, Inc. and SWBU, L.P. (incorporated by reference to Exhibit 10.4
to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.6
    
    Pipeline Lease Agreement, dated as of January 22, 2001, between Chevron Pipe Line Company
and Fin-Tex Pipe Line Company (incorporated by reference to Exhibit 10.5 to Form S-1, filed
by the Company on May 11, 2005, SEC File No. 333-124797).10.7
    
    Pipeline Lease Agreement, dated as of February 21, 1997, between Navajo Pipeline Company and
American Petrofina Pipe Line Company (incorporated by reference to Exhibit 10.6 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).10.8
    
    Contribution Agreement, dated as of January 25, 2005, among Holly Energy Partners, L.P.,
Holly Energy Partners  Operating, L.P., T & R Assets, Inc., Fin-Tex Pipe Line Company, Alon
USA Refining, Inc., Alon Pipeline Assets, LLC, Alon Pipeline Logistics, LLC, Alon USA, Inc.
and Alon USA, LP. (incorporated by reference to Exhibit 10.7 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).10.9
    
    Pipelines and Terminals Agreement, dated as of February 28, 2005, between Alon USA, LP and
Holly Energy Partners, L.P. (incorporated by reference to Exhibit 10.8 to Form S-1, filed by
the Company on May 11, 2005, SEC File No. 333-124797).10.10
    
    Master Lease, dated as of October 1, 2002, between SCS Finance I, L.P. and Southwest
Convenience Stores, LP (incorporated by reference to Exhibit 10.9 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).10.11
    
    Loan Agreement, dated as of October 1, 2002, between GE Capital Franchise Finance
Corporation and SCS Finance I, L.P. (incorporated by reference to Exhibit 10.10 to Form S-1,
filed by the Company on May 11, 2005, SEC File No. 333-124797).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.12
    
    Equipment Loan and Security Agreement, dated as of October 1, 2002, between GE Capital
Franchise Finance Corporation and SCS Finance I, L.P. (incorporated by reference to Exhibit
10.11 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.13
    
    Master Lease, dated as of October 1, 2002, between SCS Finance II, L.P. and Southwest
Convenience Stores, LP. (incorporated by reference to Exhibit 10.12 to Form S-1, filed by
the Company on May 11, 2005, SEC File No. 333-124797).10.14
    
    Loan Agreement, dated as of October 1, 2002, between GE Capital Franchise Finance
Corporation and SCS Finance II, L.P. (incorporated by reference to Exhibit 10.13 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.15
    
    Equipment Loan and Security Agreement, dated as of October 1, 2002, between GE Capital
Franchise Finance Corporation and SCS Finance II, L.P. (incorporated by reference to Exhibit
10.14 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.16
    
    Amended and Restated Credit Agreement, dated as of January 14, 2004, among Alon USA, Inc.,
the lenders listed therein and Credit Suisse First Boston (incorporated by reference to
Exhibit 10.15 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.17
    
    First Amendment, dated as of February 10, 2005, to the Amended and Restated Credit
Agreement, dated as of January 14, 2004, among Alon USA, Inc., the lenders listed therein
and Credit Suisse First Boston, and the Guarantee and Collateral Agreement, dated as of
January 14, 2004, among Credit Suisse First Boston, Alon USA, Inc., the subsidiaries of Alon
USA, Inc. identified therein and Alon USA, Inc. (incorporated by reference to Exhibit 10.17
to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.18
    
    Second Amendment, dated as of May 6, 2005, to the Amended and Restated Credit Agreement,
dated as of January 14, 2004, among Alon USA Energy, Inc., the lenders listed therein and
Credit Suisse First Boston (incorporated by reference to Exhibit 10.18 to Form S-1/A, filed
by the Company on June 17, 2005, SEC File No. 333-124797).10.19
    
    Guarantee and Collateral Agreement, dated as of January 14, 2004, among Credit Suisse First
Boston, Alon USA, Inc., the subsidiaries of Alon USA, Inc. identified therein and Alon USA
Energy, Inc. (incorporated by reference to Exhibit 10.16 to Form S-1, filed by the Company
on May 11, 2005, SEC File No. 333-124797).10.20
    
    Amended Revolving Credit Agreement, dated as of January 14, 2004, among Alon USA, LP, the
guarantor companies and financial institutions identified therein and Israel Discount Bank
of New York (incorporated by reference to Exhibit 10.19 to Form S-1, filed by the Company on
May 11, 2005, SEC File No. 333-124797).10.21
    
    First Amendment, dated as of February 10, 2005, to the Amended Revolving Credit Agreement,
dated as of January 14, 2004, among Alon USA, LP, the guarantor companies and financial
institutions identified therein and Israel Discount Bank of New York (incorporated by
reference to Exhibit 10.20 to Form S-1, filed by the Company on May 11, 2005, SEC File No.
333-124797).10.22
    
    Second Amendment, dated as of June 16, 2005, to the Amended Revolving Credit Agreement,
dated as of January 14, 2004, among Alon USA, LP, the guarantor companies and financial
institutions identified therein and Israel Discount Bank of New York (incorporated by
reference to Exhibit 10.20.1 to Form S-1/A, filed by the Company on June 17, 2005, SEC File
No. 333-124797).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.23
    
    Amended Revolving Credit Agreement, dated as of February 15, 2006, among Alon USA, LP, the
guarantor companies and financial institutions named therein, Israel Discount Bank of New
York and Bank Leumi USA (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the
Company on February 16, 2006, SEC File No. 001-32567).10.24
    
    Amended Revolving Credit Agreement, dated as of June 22, 2006, among Alon USA, LP, EOC
Acquisition, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other
guarantor companies and financial institutions from time to time named therein (incorporated
by reference to Exhibit 10.2 to Form 8-K filed by the Company on June 26, 2006, SEC File No.
001-32567).10.25
    
    First Amendment to Amended Revolving Credit Agreement, dated as of August 4, 2006, to the
Amended Revolving Credit Agreement, dated as of June 22, 2006, among Alon USA, LP, EOC
Acquisition, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other
guarantor companies and financial institutions from time to time named therein.10.26
    
    Waiver, Consent, Partial Release and Second Amendment, dated as of February 28, 2007, to the
Amended Revolving Credit Agreement, dated as of June 22, 2006, Alon USA, LP, Edgington Oil
Company, LLC, Israel Discount Bank of New York, Bank Leumi USA and certain other guarantor
companies and financial institutions from time to time named therein (incorporated by
reference to Exhibit 10.2 to Form 8-K filed by the Company on March 5, 2007, SEC File No.
001-32567).10.27
    
    Credit Agreement, dated as of June 6, 2006, among Southwest Convenience Stores, LLC, the
lenders party thereto and Wachovia Bank, National Association (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by the Company on June 7, 2006, SEC File No. 001-32567).10.28
    
    Credit Agreement, dated as of June 22, 2006, among Alon USA Energy, Inc., the lenders party
thereto and Credit Suisse (incorporated by reference to Exhibit 10.1 to Form 8-K filed by
the Company on June 26, 2006, SEC File No. 001-32567).10.29
    

    Amended and Restated Credit Agreement, dated as of July 26, 2005, among Paramount Petroleum
Corporation, Bank of America, N.A. and Société Générale (incorporated by reference to
Exhibit 10.1 to Form 8-K, filed by the Company on August 9, 2006, SEC File No. 001-32567).10.30
    
    First Amendment to Amended and Restated Credit Agreement, dated as of January 26, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.2 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.31
    
    Second Amendment to Amended and Restated Credit Agreement, dated as of February 28, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.3 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.32
    
    Third Amendment to Amended and Restated Credit Agreement, dated as of June 12, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.4 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.33
    
    Fourth Amendment to Amended and Restated Credit Agreement, dated as of June 16, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.5 to Form 8-K, filed by the Company on August 9,
2006, SEC File No. 001-32567).10.34
    
    Fifth Amendment to Amended and Restated Credit Agreement, dated as of June 22, 2006, among
Paramount Petroleum Corporation, Bank of America, N.A., Banc of America Securities LLC and
the lenders party thereto (incorporated by reference to Exhibit 10.6 to Form 8-K, filed by
the Company on August 9, 2006, SEC File No. 001-32567).10.35
    
    Sixth Amendment to Amended and Restated Credit Agreement, dated as of December 21, 2006,
among Paramount Petroleum Corporation, Bank of America, N.A. and the lenders party thereto
(incorporated by reference to Exhibit 10.1 to Form 8-K, filed by the Company on December 22,
2006, SEC File No. 001-32567).10.36
    
    Second Amended and Restated Credit Agreement, dated as of February 28, 2007, among Paramount
Petroleum Corporation, Bank of America, N.A. and certain other guarantor companies and
financial institutions from time to time named therein (incorporated by reference to Exhibit
10.1 to Form 8-K filed by the Company on March 5, 2007, SEC File No. 001-32567).10.37
    
    Management and Consulting Agreement, dated as of August 1, 2003, among Alon USA, Inc., Alon
Israel Oil Company, Ltd. And Alon USA Energy, Inc. (incorporated by reference to Exhibit
10.21 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.38
    
    Amendment, dated as of June 17, 2005, to the Management and Consulting Agreement, dated as
of August 1, 2003, among Alon USA, Inc., Alon Israel Oil Company, Ltd. And Alon USA Energy,
Inc. (incorporated by reference to Exhibit 10.21.1 to Form S-1/A, filed by the Company on
June 17, 2005, SEC File No. 333-124797).10.39
    
    Registration Rights Agreement, dated as of July 6, 2005, between Alon USA Energy, Inc. and
Alon Israel Oil Company, Ltd. (incorporated by reference to Exhibit 10.22 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.40*
    
    Executive Employment Agreement, dated as of July 31, 2000, between Jeff D. Morris and Alon
USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit 10.23 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.41*
    
    Executive Employment Agreement, dated as of July 31, 2000, between Claire A. Hart and Alon
USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit 10.24 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.42*
    
    Executive Employment Agreement, dated as of February 5, 2001, between Joseph A. Concienne,
III and Alon USA GP, Inc., as amended on May 4, 2005 (incorporated by reference to Exhibit
10.25 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.43*
    
    Management Employment Agreement, dated as of October 1, 2002, between Harlin R. Dean and
Alon USA GP, LLC, as amended on May 4, 2005 (incorporated by reference to Exhibit 10.26 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.44*
    
    Amendment, dated as of October 1, 2003, to the Management Employment Agreement, dated as of
October 1, 2002, between Harlin Dean and Alon USA GP, LLC, as amended on May 4, 2005
(incorporated by reference to Exhibit 10.26.1 to Form S-1/A, filed by the Company on June
17, 2005, SEC File No. 333-124797).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.45*
    
    Amendment to Executive/Management Employment Agreement, dated as of November 7, 2005,
between Harlin Dean and Alon USA GP, LLC (incorporated by reference to Exhibit 10.1 to Form
8-K, filed by the Company on November 8, 2005, SEC File No. 001-32567).10.46*
    
    Amended and Restated Management Employment Agreement, dated as of August 9, 2006, between
Harlin R. Dean and Alon USA GP, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K
filed by the Company on August 9, 2006, SEC File No. 001-32567).10.47*
    
    Management Employment Agreement, dated as of September 1, 2000, between Yosef Israel and
Alon USA GP, LLC (incorporated by reference to Exhibit 10.33 to Form 10-K filed by the
Company on March 15, 2006, SEC File No. 001-32567).10.48*
    
    Amendment to Executive/Management Employment Agreement, dated as of May 1, 2005 between
Yosef Israel and Alon USA GP, LLC (incorporated by reference to Exhibit 10.34 to Form 10-K
filed by the Company on March 15, 2006, SEC File No. 001-32567).10.49*
    
    Executive Employment Agreement, dated as of August 1, 2003 between Shai Even and Alon USA
GP, LLC.10.50*
    
    Annual Cash Bonus Plan (incorporated by reference to Exhibit 10.27 to Form S-1, filed by the
Company on May 11, 2005, SEC File No. 333-124797).10.51*
    
    Description of 10% Bonus Plan (incorporated by reference to Exhibit 10.28 to Form S-1, filed
by the Company on May 11, 2005, SEC File No. 333-124797).10.52*
    
    Change of Control Incentive Bonus Program (incorporated by reference to Exhibit 10.29 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.53*
    
    Description of Director Compensation (incorporated by reference to Exhibit 10.30 to Form
S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.54*
    
    Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.31 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.55*
    
    Form of Officer Indemnification Agreement (incorporated by reference to Exhibit 10.32 to
Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.56*
    
    Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit
10.33 to Form S-1, filed by the Company on May 11, 2005, SEC File No. 333-124797).10.57
    
    Liquor License Purchase Agreement, dated as of May 12, 2003, between Southwest Convenience
Stores, LLC and SCS Beverage, Inc. (incorporated by reference to Exhibit 10.34 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.58
    
    Premises Lease, dated as of May 12, 2003, between Southwest Convenience Stores, LLC and SCS
Beverage, Inc. (incorporated by reference to Exhibit 10.35 to Form S-1/A, filed by the
Company on June 17, 2005, SEC File No. 333-124797).10.59*
    
    Alon Assets, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.36 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.60*
    
    Alon USA Operating, Inc. 2000 Stock Option Plan (incorporated by reference to Exhibit 10.37
to Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.61*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and
Jeff D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.38 to
Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.62
    
    Shareholder Agreement, dated as of July 2000, between Alon Assets, Inc. and Jeff D. Morris,
as amended on June 30, 2002 (incorporated by reference to Exhibit 10.39 to Form S-1/A, filed
by the Company on June 17, 2005, SEC File No. 333-124797).10.63*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon USA Operating,
Inc. and Jeff D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit
10.40 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.64
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon USA Operating, Inc. and Jeff
D. Morris, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.41 to Form
S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.65*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and
Claire A. Hart, as amended on June 30, 2002 and July 25, 2002 (incorporated by reference to
Exhibit 10.42 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).10.66
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon Assets, Inc. and Claire A.
Hart, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.43 to Form S-1/A,
filed by the Company on June 17, 2005, SEC File No. 333-124797).10.67*
    
    Incentive Stock Option Agreement, dated as of July 31, 2000, between Alon USA Operating,
Inc. and Claire A. Hart, as amended on June 30, 2002 and July 25, 2002 (incorporated by
reference to Exhibit 10.44 to Form S-1/A, filed by the Company on June 17, 2005, SEC File
No. 333-124797).10.68
    
    Shareholder Agreement, dated as of July 31, 2000, between Alon USA Operating, Inc. and
Claire A. Hart, as amended on June 30, 2002 (incorporated by reference to Exhibit 10.45 to
Form S-1/A, filed by the Company on June 17, 2005, SEC File No. 333-124797).10.69*
    
    Incentive Stock Option Agreement, dated as of February 5, 2001, between Alon Assets, Inc.
and Joseph A. Concienne, III, as amended on July 25, 2002 (incorporated by reference to
Exhibit 10.46 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).10.70
    
    Shareholder Agreement, dated as of February 5, 2001, between Alon Assets, Inc. and Joseph A.
Concienne, III (incorporated by reference to Exhibit 10.47 to Form S-1/A, filed by the
Company on June 17, 2005, SEC File No. 333-124797).10.71*
    
    Incentive Stock Option Agreement, dated as of February 5, 2001, between Alon USA Operating,
Inc. and Joseph A. Concienne, III, as amended on July 25, 2002 (incorporated by reference to
Exhibit 10.48 to Form S-1/A, filed by the Company on June 17, 2005, SEC File No.
333-124797).10.72
    
    Shareholder Agreement, dated as of February 5, 2001, between Alon USA Operating, Inc. and
Joseph A. Concienne, III (incorporated by reference to Exhibit 10.49 to Form S-1/A, filed by
the Company on June 17, 2005, SEC File No. 333-124797).10.73*
    
    Agreement of Principles of Employment, dated as of July 6, 2005, between David Wiessman and
Alon USA Energy, Inc. (incorporated by reference to Exhibit 10.50 to Form S-1/A, filed by
the Company on July 7, 2005, SEC File No. 333-124797).10.74*
    
    Alon USA Energy, Inc. 2005 Incentive Compensation Plan, as amended on November 7, 2005
(incorporated by reference to Exhibit 10.2 to Form 8-K, filed by the Company on November 8,
2005, SEC File No. 001-32567).




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.75*
    
    Agreement, dated as of July 6, 2005, among Alon USA Energy, Inc., Alon USA, Inc., Alon USA
Capital, Inc., Alon USA Operating, Inc., Alon Assets, Inc., Jeff D. Morris, Claire A. Hart
and Joseph A. Concienne, III (incorporated by reference to Exhibit 10.52 to Form S-1/A,
filed by the Company on July 7, 2005, SEC File No. 333-124797).10.76*
    
    Form of Restricted Stock Award Agreement relating to Director Grants pursuant to Section 12
of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference to
Exhibit 10.1 to Form 8-K filed by the Company on August 5, 2005, SEC File No. 001-32567).10.77*
    
    Form of Restricted Stock Award Agreement relating to Participant Grants pursuant to Section
8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by reference
to Exhibit 10.1 to Form 8-K filed by the Company on August 23, 2005, SEC File No.
001-32567).10.78*
    
    Form II of Restricted Stock Award Agreement relating to Participant Grants pursuant to
Section 8 of the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.3 to Form 8-K filed by the Company on November 8, 2005, SEC File No.
001-32567).10.79
    
    Purchase and Sale Agreements, dated as of February 13, 2006, between Alon Petroleum Pipe
Line, LP and Sunoco Pipelines, LP, (incorporated by reference to Exhibit 10.1 to Form 8-K
filed by the Company on February 13, 2006, SEC File No. 001-32567).10.80
    
    Stock Purchase Agreement, dated as of April 28, 2006, among Alon USA Energy, Inc., The Craig
C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The Jerrel C. Barto and
Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy, III and Mark R. Milano
(incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on May 2, 2006,
SEC File No. 001-32567).10.81
    
    First Amendment to Stock Purchase Agreement, dated as of June 30, 2006, among Alon USA
Energy, Inc., The Craig C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The
Jerrel C. Barto and Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy III
and Mark R. Milano (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the
Company on November 14, 2006, SEC File No. 001-32567).10.82
    
    Second Amendment to Stock Purchase Agreement, dated as of July 31, 2006, among Alon USA
Energy, Inc., The Craig C. Barto and Gisele M. Barto Living Trust, Dated April 5, 1991, The
Jerrel C. Barto and Janice D. Barto Living Trust, Dated March 18, 1991, W. Scott Lovejoy III
and Mark R. Milano (incorporated by reference to Exhibit 10.2 to Form 10-Q filed by the
Company on November 14, 2006, SEC File No. 001-32567).10.83
    
    Agreement and Plan of Merger, dated as of April 28, 2006, among Alon USA Energy, Inc., Apex
Oil Company, Inc., Edgington Oil Company, and EOC Acquisition, LLC (incorporated by
reference to Exhibit 10.2 to Form 8-K filed by the Company on May 2, 2006, SEC File No.
001-32567).10.84
    
    Agreement and Plan of Merger, dated March 2, 2007, by and among Alon USA Energy, Inc., Alon
USA Interests, LLC, ALOSKI, LLC, Skinnys, Inc. and the Davis Shareholders (as defined
therein) (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on
March 6, 2007, SEC File No. 001-32567).23.1
    
    Consent of KPMG LLP.31.1
    
    Certifications of Chief Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certifications of Chief Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Identifies management contracts and compensatory plans or arrangements.
    
    Filed under confidential treatment request.